The pound to euro conversion could find itself popular over the course of the next week as we note the British pound to be extremely oversold.
We have argued that with Brexit uncertainty fading over the weekend the pound may be free to move higher over the coming week.
This presents those with outstanding GBP to EUR payments a golden opportunity to jump on better rates.
Note that studies confirm that in the medium-term the outlook for sterling remains biased to further losses so any gains could ultimately reverse.
Over the coming week the Eurozone has the busiest economic calendar and looks to be where the action lies.
Data from the euro-zone will be carefully analysed by investors in an attempt to ascertain the level of ‘pass-through’ of outside factors on the euro-area economy, so domestic data still has a role, if not currently a central one, to play.
Data in the Week Ahead
The week starts off with the release of PMI data, showing levels of business activity in Services and Manufacturing in both Germany and the Euro-zone in February (preliminary estimates).
This is then followed by the release of the results of the IFO business sentiment survey on Tuesday for Germany, which could cause marginal movement due its accuracy as a leading indicator of growth in the largest economy in the block.
The final estimate of Euro-zone CPI in January is released on Thursday, with previous estimates at 0.4% yoy, 0.0% mom and 1.0% yoy for Core.
On Friday, however, the release of German CPI in February (preliminary estimate) could provide a heads up as to the wider euro-zone’s CPI for February, so it may be closely watched and also cause some volatility.
Pound to Euro Forecast: Still Falling
The weekly chart still shows limited down-side availability for GBPEUR.
The pair has reached substantial support from the 200-week MA and pulled back up.
It has also reached the minimum target calculated using the height of the pattern extrapolated below the neckline at roughly 1.2700.
Therefore, there is a possibility of further upside developing as the exchange rate bounces off this sturdy support cluster.
If, however, there is a deeper penetration below the 200-week MA and the 1.2500 level, that might provide confirmation for an extension down to 1.2310.
The daily chart shows the pair falling inside a descending channel.
It has reached support, however and is currently consolidating, in what might be a triangle formation.
If the triangle breaks lows and moves below the 1.2670 lows that would confirm more downside, however., the 200-week MA at 1.2635 would be expected to check down-side momentum and preventer a deeper penetration.
A break higher would not suffer the same restrictions, and so a move above 1.3052 would probably reach 1.3150, just below where the 50-day MA is situated, and likely to produce tough resistance.
Euro to Dollar Outlook
EUR/USD has completed an A-B-C correction from off the December lows.
It rolled over on February 11 and then sold off for 5 days in a row, reaching lows of 1.1070.
It has found support on the R2 Monthly Pivot where it is currently consolidating.
If there is a re-break below the 1.1070 lows, however, that would confirm the onset of more downside for me, leading to a move down to a target at the 200-day MA situated at 1.1027.
PS: Copy signals and Earn on Forex4you - https://www.share4you.com/en/?affid=0fd9105
