EURGBP sold off sharply in yesterday’s trading as market participants square their positions ahead of the German GDP report due tomorrow. The currency pair fell from the intraday high of 0.9131 to a low of 0.9052. As of this writing, EURGBP is trading slightly higher at 0.9072.
Due to be released at 9:00 am GMT tomorrow, Germany’s preliminary GDP report for Q2 2020 is expected to show that euro zone’s largest economy contracted by 9.0%. A disappointing reading could weigh on EURGBP even more and push it lower. On the other hand, a better-than-expected reading could draw bids into the currency pair and help it pare its gains.
On the 4-hour time frame, it can be seen that the uptrend on EURGBP is still intact. By connecting the higher lows of July 10 and July 21, it can be seen that the currency pair is testing support at the rising trendline. This area, around 0.9054, also coincides with the 100 SMA. Lastly, this level aligns with the 61.8% Fib level when you draw the Fibonacci retracement tool from the low of July 21 to the high of July 27.
A couple of bullish candles have already formed which could indicate that EURGBP may soon trade higher. If there are enough buyers in the market, we could soon see the currency pair retest its recent highs at 0.9147.
On the other hand, a strong close below today’s low at 0.9051 could invalidate the confluence of support. It may mean that EURGBP could soon trade even lower with near-term support at 0.9026.