EURGBP continues lower for the third consecutive trading session amid GBP strength across the board. Bank of England Governor Mark Carney said yesterday in his testimony before the Economic Affairs Committee that the low-interest rate economic environment adds to the government’s fiscal policy. He also added that public infrastructure and corporate investment would be necessary to get the UK economy out of low growth. BOE should provide some stimulus to bring the UK economy back to the trend rate of growth. Regarding the coronavirus outbreak Mark Carney said that the impact on the UK economy and the financial spillover looks containable.
On the data front, the UK monthly GDP for December came in at +0.3% topping the forecasts of +0.2%, the previous month reading was at 0.4%. Compared with the same quarter of 2018, the GDP reading registered at 1.1% topping the expectations of 0.8%, the last reading was at 1.1%. The data shows a pick up after the Johnson win in December election.
EURGBP pairs early losses and makes an attempt to move higher. The EURGBP outlook is bearish and any move higher would meet selling pressure.
What can cancel the negative momentum is a move abobe the 50-day moving average. But the first resistance will be met at 0.8428. The critical resistance point is at 0.8479 the 50-day moving average. Next resistance stands at 0.8504 the high from February 10th session.
On the flip side, initial support for the EURGBP stands at 0.8413 the daily low. A credible break below that level might pave the way for a move down to 0.8359 the low from December 17th. The low from December 16th at 0.8303 will be the next support zone.