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2021 Open Bearish Tone Bruised by UK Lockdown

EURGBP
MNI (London)
  • EUR/GBP recovery off its Brexit trade deal react low of Gbp0.8932(Dec31) saw rate edge back within its 1% 10-dma envelope, moving through its key 10-dma to Gbp0.9049 Monday in a mix of profit take demand and reaction to a newly announced UK COVID lockdown.
  • PM Johnson's announcement of a new lockdown was well anticipated with react move coming before the actual announcement. Post announcement and rate was able to ease back toward its 10-dma into the close.
  • Cross closed just above the 10-dma (Gbp0.9014, current Gbp0.9007). Trade in Asia saw rate edge to Gbp0.9035 but reversed tack into Europe, easing to Gbp0.9015.
  • Whilst rate remains above the 10-dma it continues to reflect pressure on GBP, a break below to ease this outlook.
  • Support noted into Gbp0.9000, Gbp0.8980, Gbp0.8937/32. Resistance Gbp0.9034, stronger into Gbp0.9050. Topside of the 1.0% 10-dma envelope currently comes through at Gbp0.9097.
  • MNI Techs: EURGBP maintains a bearish outlook despite Monday's recovery The cross recently cleared a key support at 0.8983, Dec 4 / 7 low. The break highlights a bearish chart feature and the risk of a deeper sell-off. The move lower Dec 31 paves the way for a weakness towards 0.8867, Nov 23 low. On the upside initial firm resistance is 0.9093, Dec 29 high and 0.9156, Dec 22 high. Clearance of these hurdles would expose the key 0.9230 Dec high.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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