EURGBP at critical support. A break and weekly close below 0.8300 will pave the way to post Brexit referendum lows to the .7800 Zone.
The Euro continues to be plagued disappointing economic data. If the latest German ZEW sentiment read is to give us any clues it will point to an even lower manufacturing PMI data later in the week, surpassing the very ugly read last month( 45.3). PMI numbers are keenly watched by central banks because of the forward looking bias. Are companies likely to be employing more staff? Are they investing in infrastructure to grow their business? A read below 50, indicates a contracting economy, above indicates an economy that is expanding. This month, markets are pricing in another ugly month with the expectations being worse than last month, down at 44.8. If these number prove even worse then we expect the already fragile Euro to buckle!
The ‘Brexit currency’ is now flirting with key, weekly/monthly structural support. If we see a break and weekly close below 0.8300 we will likely see the post referendum level of 0.7800 being hit, as a real possibility.
Selling the 0.83 break and close, with stops above 0.8500 and profit target at 0.78, make for a great risk reward ratio.
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