EURGBP trading 0.24% higher at 0.8532 rebounding from six-month lows as the pair reacts positively to weekend polls that show the Conservatives lead the general elections by 9 points, but came short of the 14 points lead two weeks ago. If conservatives win the election will boost the pound as PM Boris Johnson will pass a Brexit plan to Congress.
Euro supported by stronger manufacturing figures from Eurozone and Germany; Germany Manufacturing PMI came in at 44.10 above market consensus of 43.8 for November. The European Monetary Union Manufacturing PMI came in 46.9 above expectations of 46.6 in November while the France Manufacturing PMI came in at 51.7, topping forecasts 51.6 in November.
The United Kingdom Manufacturing PMI came in at 48.9, topping forecasts of 48.3 in November.
Christine Lagarde in a speech in Brussels noted that Eurozone economic growth remains subdued due to trade tensions and the manufacturing sector has been suffering the most. The ECB decision in the last policy meeting shows that the bank is closely watching the side effects of the monetary policy and is ready to adjust accordingly.
EURGBP Needs to Clear the Resistance at 0.8583
EURGBP is under selling pressure since early October after the announcement for the general election on December 12th. Traders expect that a strong government will be able to process a Brexit plan.
On the technical side and while the negative momentum persists bulls will meet immediate resistance at 0.8555 today’s top, and then needs to clear the high from November 27th at 0.8583. What can cancel the bearish momentum is a move up to 50-daily moving average at 0.8675. Traders looking to buy the euro against the pound might enter a long position if EURGBP breaks above the 50-day moving average.
On the downside, immediate support stands at 0.8513 the daily low while in case of a break below that support, a move down to six-month lows at 0.8498. Next strong demand zone stands at 0.8489 the low from May 5th. Traders holding short positions might sit comfortably as long as the pair trades below the 50-day moving average.