The EUR to GBP exchange rate has pared some of its gains from yesterday’s trading. As of this writing, EURGBP is trading at 0.9280 around the 50% Fib level (when drawing the Fibonacci retracement tool from yesterday’s low to its intraday swing high). However, the currency pair looks poised to trade higher given the inverse head and shoulders pattern which formed.
Can it rally with today’s roster of PMI reports from Europe?
At 8:15 am GMT, France’s services and manufacturing PMIs for March are due. They are eyed at 39.6 and 39.4, respectively. Then at 8:30 am GMT, Germany’s version of the reports will be released. The German services PMI is anticipated at 43.0 while its manufacturing PMI is seen at 40.1. Meanwhile, the euro zone-wide reports will be due at 9:00 am GMT. The services PMI is estimated at 40.0 while the manufacturing PMI is anticipated at 40.1.
Then at 9:30 am GMT, the UK services PMI has been forecasted at 45.0 while its manufacturing PMI is seen at 45.1.
Better-than-expected data from the euro zone or disappointing UK numbers would help the EUR to GBP exchange rate trade higher. Alternatively, if euro zone reports come in lower and UK data print higher, EURGBP could fall.
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EUR to GBP Outlook
Another bullish indicator has materialized on the hourly time frame. With the currency pair consolidating in a downward-sloping angle, a falling wedge has become apparent. This is considered as an indication that the EUR to GBP exchange rate would soon rally. That is, if the market can close above today’s Asian session high at 0.9324.
Near-term resistance is at 0.9386 where the currency pair topped yesterday. However, if resistance does not hold, the next ceiling could be at 0.9497 where the EUR to GBP exchange rate peaked on March 19.
Alternatively, if buyers are unable to sustain their gains above the FIbonacci retracement levels, the rising wedge will be invalidated. A close below the 61.8% Fib level around 0.9247 could trigger a drop to 0.9140 where the EUR to GBP exchange rate could test the neckline for support.
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