EUR/GBP In Play, Beware of Losses

EUR/GBP In Play, Beware of Losses

Two of the most important event risks for EUR and GBP this month are happening on the same day, within hours of each other. U.K. retail sales will be released first during the early European trading session and ECB President Mario Draghi’s press conference follows shortly after the North American open. The ECB is not expected to change monetary policy so the most important part of tomorrow’s ECB meting will be Draghi’s presser. Starting with the ECB, today’s relatively tight range in EUR/USD suggests that investors are not positioned for dovishness even though data and rhetoric from other ECB members suggests that the central bank is warming up to the idea of more QE. If Super Mario suggests that he is willing to become Santa Mario this December, we could see sharp losses in EUR/GBP. Of course the initial move in EUR/GBP would be determined by the earlier retail sales report. Although sterling traded lower on Wednesday, the recent increase in wage growth and rise in the BRC retail sales monitor points to the greater possibility of a stronger number. We could be wrong and ECB member Draghi could be less dovish but the odds certainly favor a return to losses for EUR/GBP in the next 24 hours.

Technically, resistance in EUR/GBP is at the October high of 75 cents and while the bottom of the triangle pattern is at 0.7350, the more significant support is at 73 cents.

Chart Of The Day

Leave a Comment

Your email address will not be published. Required fields are marked *