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Outside the 1.0% 10-dma Envelope. Gbp0.8705/06 Provides Upside Key

EURGBP
MNI (London)
  • Cross closed outside the top of its 1.0% 10-dma Friday (current Gbp0.8665) but continued to struggle ahead of Gbp0.8700, with tech resistance noted just above at Gbp0.8705/06(Mar01 high/38.2% 0.9085-0.84722021 range)
  • Recovery off Friday's NY low of Gbp0.8646 extended to Gbp0.8695 in Asia before turning lower, the rate easing off to Gbp0.8672 in early Europe.
  • Rate tends not to like being outside of its 1.0% envelope for too long, a break back into the parameter to expose the 10-dma(current Gbp0.8580).
  • If rate can break the Gbp0.8705/06 area to expose recent highs between Gbp0.8730/40 ahead of the top of the 2.0% envelope, currently coming through at Gbp0.8751.
  • A lot of the recent recovery drive was seen from the closing of EUR funding positions but this seems to have slowed and might be beginning to reverse which should provide a counter to upside progress. However, technical outlook remains bullish(see MNI Techs below)
  • BOE MPC Tenreyro speaks at 1300GMT.
  • MNI Techs: A bullish short-term EURGBP outlook remains intact. The cross traded higher last week following a bullish engulfing reversal pattern on Mar 6. Recent gains have seen prices top the key resistance at 0.8646, Mar 24 high and the 50-day EMA at 0.8655. Further gains would open 0.8731, Feb 26 high where a break would further strengthen the current bullish cycle.On the downside, initial support is at 0.8582, Apr 7 low.
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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