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Downside Remains in Focus

EURGBP
MNI (London)
  • EUR/GBP continued to reflect GBP recovery strength, the cross having broken back and closed below its key 10-dma Monday.
  • EUR/GBP extended its corrective pullback through Tuesday before finding support at Gbp0.8920. Recovery efforts were capped at just above Gbp0.8940 before closing at Gbp0.8933.
  • Consolidation in Asia with rate contained within a range of Gbp0.8923/36.
  • Support remains at Gbp0.8920, a break to turn focus on the base of the 1.0% 10-dma envelope which has eased to Gbp0.8890. Resistance now seen at Gbp0.8940, with the 10-dma currently coming through at Gbp0.8980.
  • Whilst rate remains below this latter level it keeps the underlying tone bearish.
  • BOE Bailey comments Tuesday aided GBP recovery, pushing back thoughts that negative rates are imminent. Mention of them keeps the market aware that they remain in the Bank's armoury.
  • MNI Techs: EURGBP traded lower yesterday and in the process breached support at 0.8932, Dec 31 low. The break reinforces a bearish theme with scope for weakness towards 0.8867, Nov 23 low. Moving average studies are beginning to display a bearish condition reinforcing the current trend direction. On the upside, key short-term resistance has been defined at 0.9085, Jan 6 high. Initial resistance is at 0.8996.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com

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