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FOREX: EURGBP Extends Below Trendline Support, Lowest Since August 2022

FOREX
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  • Continued resilience for the pound and the broad-based single currency weakness on Monday has seen EURGBP (-0.26%) hit the lowest point since August 2022. Desks continue to note that at the current juncture, support for the Pound is emanating both from its risk beta as well as solid growth momentum and a cautious central bank.
  • The trendline break below 0.8400 and the subsequent breach of key support at 0.8383, the Jul 17 low, are technically significant and represent a resumption of the medium-term downtrend. Initial targets for the moves are 0.8340, the Aug 2 ’22 low and 0.8311, 3.00 projection of the Aug 8 - 13 - 14 price swing.
  • Goldman Sachs noted that while long GBP positioning looks stretched on some metrics, they do not see that as enough of a headwind when the broader pro-cyclical backdrop is driving gains and is likely to remain supportive.
  • As noted, Chancellor Reeves is due to deliver her speech at the Labour Party Conference today, with the budget just over 5 weeks away (30 October).
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  • Continued resilience for the pound and the broad-based single currency weakness on Monday has seen EURGBP (-0.26%) hit the lowest point since August 2022. Desks continue to note that at the current juncture, support for the Pound is emanating both from its risk beta as well as solid growth momentum and a cautious central bank.
  • The trendline break below 0.8400 and the subsequent breach of key support at 0.8383, the Jul 17 low, are technically significant and represent a resumption of the medium-term downtrend. Initial targets for the moves are 0.8340, the Aug 2 ’22 low and 0.8311, 3.00 projection of the Aug 8 - 13 - 14 price swing.
  • Goldman Sachs noted that while long GBP positioning looks stretched on some metrics, they do not see that as enough of a headwind when the broader pro-cyclical backdrop is driving gains and is likely to remain supportive.
  • As noted, Chancellor Reeves is due to deliver her speech at the Labour Party Conference today, with the budget just over 5 weeks away (30 October).