EUR/GBP Awaits Trading Range Break-Out to Confirm Near-Term Direction
The EUR/GBP pair remains trapped within a seven-day trading range to currently trade absolutely flat from yesterday’s close at 0.7870.
The Euro bulls was not benefited by upbeat German GDP that posted a 0.7% growth during the first quarter of 2016 over 0.3% growth recorded in the previous quarter. The muted reaction to stronger-than-expected German GDP print could be attributed to weaker German CPI number that continued to raise concerns over the ongoing deflationary pressure in the region.
Investors now shift their focus to the flash estimate of overall Euro-zone growth figure for the first quarter of 2016 and US monthly retails sales data, which would provide some momentum to the EUR/USD and GBP/USD majors and eventually to the EUR/GBP cross.
Technical levels to watch
On the immediate upside, momentum above 0.7900 handle would bring 0.7925 resistance back into the picture, which is followed by two-week high resistance near 0.7950. Only a decisive strength above 0.7925-50 area, the top end of the trading range, would increase the prospects of further up-move for the pair in the near-term.
On the flip side, sustained weakness below 20-day SMA support near 0.7860, leading to a follow through weakness below Thursday’s low of 0.7846, would open room for further downside in the near-term, initially towards 0.7790 horizontal support and eventually towards April lows support near 0.7740-35 area.