Yesterday was the first time in five trading days that EURGBP finished with a profit. The currency pair closed the day at 0.9051 after opening at 0.9013. Technicals suggest that we could see more upside potential on the currency pair too.
On the 4-hour time frame, we can see that EURGBP bounced off perfectly from support at the rising trendline when you connect the lows of April 30, May 6, May 8, June 9, June 10, and June 16.
EURGBP, 4-Hour Chart
What caused EURGBP to trade higher? On the fundamental side of things, there was a discrepancy between the economic data released from the UK and euro zone yesterday. As reported by my colleague Crispus Nyaga, UK auto sales dropped in June while Germany factory orders saw an uptick.
With these being said, we could see today’s economic data dictate the direction on EURGBP once again. At 7:00 am GMT, the German industrial production report will be released. The forecast is for it to print at 11.0% for May. Then at 8:30 am GMT, the UK’s Halifax House Price Index (HPI) is seen to come in at -0.8%.
Better-than-expected data euro zone data or negative UK data could help EURGBP extend its rally. Alternatively, worse-than-expected German industrial production or positive Halifax HPI could weigh down EURGBP.
On the 1-hour time frame, we can see that the currency pair has been consolidating for the past few trading hours. Because this follows after a strong rally, a bullish pennant chart pattern seems to have formed. When you enroll in our free forex trading course, you will learn that this is widely considered as a bullish continuation pattern. A strong close above yesterday’s high at 0.9066 could mean that we may soon see EURGBP rally to its June 29 highs at 0.9167. On the other hand, a close below the currency pair’s recent lows at 0.9044 may mean more downside potential ahead to the near-term support level at 0.9025.
Bullish Pennant on 1-Hour Chart
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