EURGBP saw another bearish close yesterday and looks ready to test the lower support levels this week after the U.K. got a boost from Nationwide House Prices, with the market showing a 3.7% rise against the 2% expected.
The result meant that house prices in the U.K. hit a record high in August. The data confirms yesterday’s mortgage approvals, which were surprisingly strong for July. The figures were helped by a tax cut in July from Chancellor Rishi Sunak as he sought to support the broader economy from the recent economic turmoil.
The figures will give the U.K. government some cheer, but many analysts are expecting a slowdown in the labour market when the furlough scheme winds down in October. This could put some downward pressure on house prices and mortgage applications.
Today also brings a speech by the Bank of England’s Ben Broadbent and any market-moving comments could be supportive for the pound after the MPC member’s dovish comments in recent months. Broadbent made it clear that the bank would do what it takes to support banks and companies, with the chance of further stimulus a possibility.
EURGBP Technical Outlook
The 0.8950 level was seeing a battle between the bulls and bears and the short side is in charge. This level would be the area to put a stop loss, but the market looks like a test of 0.8870 should happen this week, with the potential for lower prices if that level fails to hold.