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EURGBP Market Update

1/20/2023 11:21 AM

The euro shows a restrained increase against the British pound, developing the "bullish" momentum formed the day before, when the EUR/GBP pair updated local lows from December 21. The upward dynamics at the end of the week is mainly due to technical factors, while the fundamental background changes slightly. Both currencies receive significant support from the weakening US dollar, which reacts to weak macroeconomic statistics from the US and expectations of lower interest rate growth by the US Federal Reserve.

Released in the US data recorded a decline in Industrial Production in December by 0.7% from -0.6% in the previous month, while analysts expected -0.1%. Capacity Utilization also corrected from 79.4% to 78.8%, while forecasts assumed an increase to 79.6%. In turn, the change in the number of Building Permits Change in December amounted to -1.6%, while preliminary estimates were -1.1%, the number of issued Building Permits fell sharply by 10.6%, and Housing Starts fell by 1.4% after falling by 1.8% in November.

Today, investors are waiting for the publication of statistics from the UK on the dynamics of Retail Sales, forecasts for which are quite optimistic and suggest an increase in monthly terms by 0.5% after a decrease of 0.4% a month earlier, and from -5.9% to -4.1% in annual terms.

On the D1 chart Bollinger Bands are trying to reverse horisontally. The price range is expanding from below, but it fails to keep pace with the "bearish" activity of the middle of the week. MACD is going down preserving a stable sell signal (located below the signal line). The indicator is trying to consolidate below the zero level. Stochastic, having reached its lows, reversed into an ascending plane, signaling in favor of the development of corrective growth in the nearest time intervals.

Resistance levels: 0.8750, 0.8777, 0.8817, 0.8864. | Support levels: 0.8720, 0.8688, 0.8645, 0.8600.

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