EUR/GBP resisted on topside with eyes on Brexit and German economic woes

EUR/GBP has been stuck in a tight trading range, between 0.8600 and 0.8645, down -0.31% at the time of writing, extending its decline from the 0.93 handle and below the 0.85 handle. There are a number of elements driving the cross, from Brexit sentiment to hardcore data.

Earlier, the Eurozone economy was reported to have grown by 0.2% QoQ in the third quarter while the key reminded fro the report was that the manufacturing sector remained in dire state. Germany probably contracted by 0.1% QoQ, making it the weakest link which is where the European Central Bank will need to focus, indeed a probable weight for the single currency. 

Eyes on Brexit

Meanwhile, with eyes on Brexit, today is 31 October, but low and behold, the UK remains within the EU and headed for a general election on the 12th December instead which likely means another year of turmoil for 2020 and volatility for the Pound. Indeed, while a general election likely favours a tory victory, it is too early to take a signal from the polls. The Conservatives hold a 10 point lead over Labour, which leaves Labour in a position much like where they started the 2017 campaign. However, a Tory majority is seen as a coin toss.

EUR/GBP levels

Bulls lack conviction on the upside and the market remains on the defensive. "There remains scope very near term for a move into the.8705/.8790 band (current intraday Elliott wave counts) ahead of further losses," analysts at Commerzbank explained.

"Below 0.8571 we would allow for the slide to extend to the 0.84652019 low. We note the TD support at 0.8485.Initial resistance is .8786 the mid September low. Key resistance is the55 day ma at 0.8872 and the October high at 0.9022. While capped here a negative bias is entrenched."