EURGBP Break Above
GBP risk premiums in the FX option market increased further last week while EURGBP was little changed following the recent repricing of Brexit risks. EURGBP extends gains above 0.79 handle after breaking major resistance at 0.7880. Risk-off in Asia post below estimates Chinese data has been supportive of the single currency, pushing the cross to flirt with fresh multi-week tops in the vicinity of 0.7949. ‘Brexit’ worries might continue capping any sharp upside for the Pound, thus limiting near-term downside for EUR/GBP. The pair is on track to test major resistance at 0.7949, break above will see gains upto 0.80 levels. 61.8% Fib at 0.7906 is now major support on the downside, we see resumption of weakness only on break below 0.7875 (trendline resistance turned support). Technicals are supportive of upside in the pair, Stochs RSI and MACD are biased higher, Bollinger Bands are widening. Good to buy dips around 0.7930 levels, SL: 0.7875, TP: 0.7990/ 0.80/ 0.8025 (Daily Forex Technical Analysis).
EURGBP Brexit | Daily Forex Technical Analysis
Research Team at Danske Bank, suggests that with less than two weeks to referendum day, it is no longer possible to register as a voter (the deadline was extended to midnight on Thursday as the website crashed on Tuesday) and both camps have intensified their campaigns. We believe that the Brexit can make the pound a safe haven currency like the Swiss franc and the dollar. Not only: Large current-account deficit is one of U.K.’s key economic vulnerabilities, ans a “leave” vote could increase risk premia in GBP assets; But in event of Brexit, “referendum-itis” will be catching from Catalonia to Netherlands, in France could change the outcome of next year’s presidential election: and this will probably be the end of the euro. For these reasons we believe that the alternative currencies to the euro could become haven.
The cross met increasing upside pressure early in Asia today, as fears the UK might leave the EU at the referendum in late June have sparked a wave of selling interest around the Sterling.
EURGBP Short 4H | Daily Forex Technical Analysis
In terms of data releases, this week’s schedule is very busy. The most important release is Wednesday’s April labour market report. The labour market cooled in Q1, in our view partly reflecting delayed hiring due to Brexit uncertainties. The question is whether this slowdown has continued in Q2, when growth based on data released so far seems to be better than in Q1.
EURGBP Moving Average
We plan to monitor the coming opinion polls closely for any new trends. Until last week, most opinion polls had ‘remain’ ahead (although not by much or necessarily statistical significantly) but it is not over yet. At this stage, we cannot say what the outcome will be. Betfair’s implied probability of a Brexit is currently 27.4%.
Nothing worth mentioning data wise today, with UK’s inflation figures and EMU’s Industrial Production out tomorrow.