EURGBP Eyes Trend Line Resistance Amid Positive Forex News from the Euro Zone
EURGBP was initially under selling pressure on broad pound strength. The currency pair first fell to its new intra-week lows at 0.8464 before paring some of its gains following positive data from the euro zone. As of this writing, EURGBP is trading at 0.8490.
CPI as Expected, Retail Sales Top Forecast
The euro zone also released a roster of economic data a few minutes ago. Inflation in the region for November was at 1.3%, for both its headline CPI and core CPI readings. This was the exact number that analysts had predicted. Meanwhile, consumer spending for the month was much higher than anticipated at 1.0% versus the 0.6% forecast.
Key Event Risk for the Pound Tomorrow
The market’s reaction to the reports seem to be muted. This could be because we have a key event risk for the pound due tomorrow. UK Prime Minister Boris Johnson is scheduled to meet with European Commission head Ursula von der Leyen. The latter has previously expressed concerns about Johnson’s Brexit plan. She said that it is unlikely for the UK and the EU to iron out all negotiations by the December 31, 2020 deadline. If she reiterates her concern, we could see weakness in the pound tomorrow as this would raise concerns of a no-deal Brexit.
On the hourly time frame, we can see that EURGBP has been trending lower. This is evidenced by the falling trend line that becomes apparent when you connect the highs of January 6 and this morning’s session. Now, the currency pair could find resistance at the trend line around the 0.8500 handle. The price also coincides with the area between the 38.2% and 50% Fib levels (when you draw the Fibonacci retracement tool from the high of January 6 to today’s lows). Reversal candlesticks around the psychological handle may mean that EURGBP may soon fall back to today’s lows at 0.8464.
On the other hand, a strong bullish close above the trend line could mean that the currency pair may soon rally to its intraweek high at 0.8543.