A very quiet week to say the least for EUR/GBP, which has traded in its tightest range since December 2017. In turn, the cross appears to be coiled up for a breakout and in my view, risks appear to be shaping up for more upside for the following reasons:
1) Good news largely in the price for GBP with the UK’s vaccine advantage diminishing. Yesterday, Germany vaccinated a record 1.1% of the population in one day.
2) GBP heading for its worst month on a seasonal basis.
3) Political tail risks amid next week’s Scottish Election likely to see GBP exposure reduced.
There are some positives for the Pound to consider. Next week, the BoE will meet and there is a good chance that the central bank could announce a tapering of QE purchases, given that the current pace of purchases is likely to see the asset purchase facility target reached by mid-August, the time at which the next MPR takes place. Elsewhere, UK/German 5Y real yields also point to lower EUR/GBP.
On the technical front, key resistance at 0.8720-30 remains intact and continues to curb rallies. Should EUR/GBP close 0.8735, this opens the door towards the 0.88 handles. On the downside, good support is situated at 0.8660-70, with the 50DMA below at 0.8617.
The Federal Reserve not only held rates and stimulus unchanged, but Chairman Powell also looked to dispel any fears that any normalization is ahead.
Despite the relief for risk assets to the Fed keeping its support in place – and subsequent boost of earnings and Biden talking stimulus – the S&P 500 still would not advance.
The Dollar would not hold back the fundamental tide with USDCAD and USDJPY most impressive – will US 1Q GDP help stabilize the Greenback?
FX Daily Analysis Europe – 30th April 2021
GBP>EUR – 1.1494
GBP>USD – 1.3908
EUR>USD – 1.2099
GBP>CAD – 1.7088
GBP>AUD – 1.7918
GBP>SEK – 11.677
GBP>AED – 5.1098
GBP>HKD – 10.802
GBP>ZAR – 20.004
GBP>CHF – 1.2651
· EUR Gross Domestic Product (QoQ)(Q1)
· CHF SNB's Chairman Jordan speech
· EUR Consumer Price Index - Core (YoY)(Apr)
· EUR Gross Domestic Product s.a. (QoQ)(Q1)
· EUR Consumer Price Index (YoY)(Apr)
· EUR Gross Domestic Product s.a. (YoY)(Q1)
- EUR/USD dips below 1.21 after German GDP misses with -1.7%
- GBP/USD pressured under 1.3950 amid dollar strength
- SNB’s Jordan: Monetary policy goal is more important than pay-outs.
- Forex Today: Dollar bounces ahead of busy end to April, eurozone GDP, US inflation data stand out
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