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EURGBP Outlook Remains Bearish, Chancellor Reeves Awaited

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  • Immediate political risk uncertainty in Europe has dissipated, as markets turn their focus to the more medium-term aspects of political paralysis for the French Government and the fiscal trajectory for a new labour government in the UK. Markets will be aware of UK Chancellor Reeves talking at 1030BST, however, her comments are unlikely to provide any market-moving information, given the need to wait for new OBR forecasts in the Autumn.
  • As such, EURGBP has been consolidating just below Friday’s closing level around 0.8455 and a bearish outlook remains intact for the cross. This view has been strengthened after respecting a key pivot resistance at 0.8500 last week, and the 50-day EMA also capping the upside.
  • A clear breach of this average is required to undermine the current bearish theme and signal scope for a stronger recovery.
  • Gains since Jun 14 appear to be a correction and initial firm support to watch lies at 0.8431, the Jun 25 low. A breach of this support would refocus attention on 0.8397, the Jun 14 low and bear trigger.

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  • Immediate political risk uncertainty in Europe has dissipated, as markets turn their focus to the more medium-term aspects of political paralysis for the French Government and the fiscal trajectory for a new labour government in the UK. Markets will be aware of UK Chancellor Reeves talking at 1030BST, however, her comments are unlikely to provide any market-moving information, given the need to wait for new OBR forecasts in the Autumn.
  • As such, EURGBP has been consolidating just below Friday’s closing level around 0.8455 and a bearish outlook remains intact for the cross. This view has been strengthened after respecting a key pivot resistance at 0.8500 last week, and the 50-day EMA also capping the upside.
  • A clear breach of this average is required to undermine the current bearish theme and signal scope for a stronger recovery.
  • Gains since Jun 14 appear to be a correction and initial firm support to watch lies at 0.8431, the Jun 25 low. A breach of this support would refocus attention on 0.8397, the Jun 14 low and bear trigger.