EURGBP slide for the second straight day as the recent rally in the pair stalled below the 0.93 mark, despite upbeat figures from the ZEW Survey. British pound attracts some bids after PM Johnson won the parliamentary vote for the legislation that would breach the Brexit treaty. GBP is also buoyed by slightly better than expected jobs data from the UK.
ZEW Survey Beat Expectations
The European Monetary Union ZEW Survey Economic Sentiment came in at 73.9, beating the forecasts 62.8 in September. The Germany ZEW Survey Economic Sentiment reported at 77.4 also topping the estimates of 69.8. The Germany Current Situation ZEW Survey registered in at -66.2, above the forecasts of -72 in September.
In other economic data from the EU, France Consumer Price Index (CPI) in August came in at 0.1% in line with estimates, while the yearly reading registered in at 0.2%. Italy Consumer Price Index came in at -0.5% in line with expectations for August.
UK Employment Data
The United Kingdom Unemployment Rate rose to 4.1% in July in line with forecasts. The previous month reading was at 3.9%. The payrolls fell by 695,000 between March and August. The number of job vacancies increase to 434K in the three months to August, 30% higher than the previous quarter but still is well below the pre-coronavirus levels. More than 5 million workers were away from work in July with almost 2.5 million being away for three months or more. The drop in the number of people in employment was 12,000 below the expectations of a drop of 125,000.
A significant improvement in unemployment with a record drop of 146K came from young people between the ages of 18 to 24. Economists now expect that more jobs will be lost when the job subsidies would expire at the end of October.
EURGBP trades lower at 0.9219 as the correction from two-month highs continues for the second day. The RSI index exits the overbought area today and now points to lower levels. The outlook is bullish for the pair, and higher levels are on the cards. Support for EURGBP stands at 0.9211 the daily low. The next level to watch for EURGBP on the downside is 0.9075 the low from September 10. Bears would take short term control if the pair breaks below the 50-day moving average at 0.9032.
On the flip side, resistance for the pair is at 0.9258 the daily high. More sellers would emerge at 0.9293 the top from September 11. If bulls break that level, then the nest resistance point stands at 0.9392 the high from March 23.