We are publishing 10 free trade ideas this week on a variety of FX pairs, Indices and Commodities. Here is Ian with a trade idea on EURGBP…
Looking at the senitment data from IG Markets, it’s clear that there are a lot of investors short of EURGBP, expecting to see a corrective move lower. This video discusses the potential for a move to the downside over the short to medium term.
Monthly – There is a triangle formation on the monthly chart. We also have a trend of lower highs that comes in at 0.9022.
Daily – There is a 261.8% Fibonacci extension level and a DeMark 13 count, that we expect will stall the upward momentum.
Intraday (four-hour) – An expanding wedge has formed and we our bias is for the price to break lower.
We look to sell EURGBP at 0.9000
Euro-zone retail sales declined 0.3% for May compared with consensus expectations of a small increase with the year-on-year increase at 1.3% from 1.8% previously which suggested subdued consumer demand.
ECB Council Member Rehn stated that the slowdown in no longer temporary. Further monetary stimulus is now needed until there is an improvement in economic conditions and inflation prospects if the central bank is to meet its mandate. Rehn is not one of the most dovish members on the committee and the comments reinforced expectations that the central bank would take further action to cut interest rates by September at the latest.
Sterling continued to be hampered by concerns over the growth outlook following the weak PMI data releases the week. There was also further speculation that the Bank of England would adopt a more dovish policy stance over the next few months. In relative global terms, however, the central bank stance is likely to be slightly restrictive, especially with expectations that the Federal Reserve and ECB will cut interest rates during the third quarter. Sterling will also gain some support if there are increased hopes that global monetary policy actions support the global growth outlook.