EUR/GBP: Bulls look like they’re on the “nice list” this Christmas
City Index December 22, 2015 12:21 AM
<p>With a complete data void and generally slow trading conditions, traders couldn’t be blamed for only keeping one eye on the markets today (perhaps with […]</p>
With a complete data void and generally slow trading conditions, traders couldn’t be blamed for only keeping one eye on the markets today (perhaps with the other on some last second online shopping ahead of the holidays), but we’ve actually seen a bit of movement. Beyond the aforementioned drop to a fresh 11-year low in Brent crude oil, the euro also caught a bid today.
The widely-followed EUR/USD pair tacked on about 70 pips early in late European trade, but traders should also be monitoring EUR/GBP, which has hit a 2-month high of its own. Trading higher for the fifth out of the last six trading days, the European pair appears on track to close above the .7300 level.
As we’ve noted before, the unit has been trapped in a 500-pip sideways range from .6950 up to .7450 for essentially the entire year. After finding a floor at the bottom of the range in late November, bulls now appear well on their way to driving rates back to the top of the range in the mid-.7000s.
Along the way, the next hurdle will be the 78.6% Fibonacci retracement of the October-November drop at .7380, but assuming that barrier is eclipsed, EUR/GBP could close the year near the top of the range, setting the stage for a very interesting start to 2016.
In terms of fundamental events, the only reports to monitor this week will come from Britain, where traders will get their first glance at November’s public sector borrowing data (tomorrow at 9:30 GMT), followed by the final read on Q3’s current account and GDP figures (Wednesday at 9:30 GMT). Trading volume will inevitably slow down during the holiday season, but bulls definitely look like they’ll be on the “nice list” come Christmas Day.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.