EURGBP nears key resistance as good news from Europe keeps coming

FTSE 100
FTSE 100

The EUR to GBP (EURGBP) is up slightly today as traders reflect on the upbeat economic data from Europe. The pair is also reacting to the breakdown of Brexit talks between the EU and the UK. The pair is trading at 0.9115, which is significantly higher than this week’s low of 0.9000.

Europe PMIs jump

Europe has been relatively successful in handling the coronavirus pandemic. While it was once the hot spot, the number of new cases has continued to decline in most countries. This success is also being seen in the economic numbers from the region.

For example, according to Markit, the manufacturing and services sector in the bloc continued their rebound in June. In the Eurozone, manufacturing PMI rose to 51.1 in July from the previous month’s 47.4. Analysts were expecting the PMI to rise to 50.0.

In the same month, the important services PMI rose to 55.1 from the previous 48.3. This growth was widespread across the eurozone. For example, in Germany, the manufacturing PMI rose to 50.0 from the previous 45.2.

The same trend is happening in the UK also. According to Markit, the services PMI rose to 56.6 in July from the previous 47.1. Analysts were expecting the PMI to jump to 51.5. Meanwhile, the manufacturing PMI rose to 53.6 from the previous 50.1.

Earlier in the day, data from the Office of National Statistics (ONS) showed that retail sales in the UK rose by 13.9% in June after rising by 12.3% in the previous month. The core retail sales rose by 13.5%.

Therefore, the EURGBP pair is potentially gaining because of the rising Brexit-related risks. Yesterday, the fifth round of Brexit talks ended without a deal.

EURGBP technical outlook

The EURGBP pair is trading at 0.9115 and the pair is in the fourth straight day of gains. On the daily chart, the pair has formed an ascending triangle pattern and is also above the 50-day and 100-day exponential moving averages.

Also, the price is between the 61.8% and 78.2% Fibonacci retracement levels. Therefore, the pair is likely to continue rising as bulls attempt to break the important resistance at 0.9135.

On the other hand, a move below 0.9000 will invalidate this trend. This is an important psychological level that is also the lowest level on July 21.

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EURGBP technical forecast


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