EURGBP: Heavy Week Ahead, Cross Remains Near 6-mth Highs

15 July, 2019 | Axiory –  The pound managed to strengthen slightly on Friday, but the EURGBP cross ended the week near six months highs, hovering close to the psychological level of 0.90.

Traders will be watching a couple of important macro release over the next days, which might push the price back above the important 0.90 mark, or on the other hand, help sterling to erase previous losses.

EURUSD Fundamental Analysis

Firstly, UK labor market data are due on Tuesday, with wage growth expected to improve further to 3.5 year-on-year, which could be positive for the British pound, however, investors might choose to ignore this fact as it looks like the Bank of England will not raise rates further, considering that other central banks are easing their monetary policies.

Shortly after, the important ZEW surveys for July are due from the euro zone and these numbers might cause some volatility on the euro crosses, such as the EURGBP one.

Wednesday will be a very busy day for currency traders as both Britain and the euro zone are releasing their inflation indices. The CPI in UK is forecast to remain strong at 2.0% yearly (or 1.7% for the core gauge), but core inflation in the euro bloc is seen decelerating sharply, from 1.1% to 0.8%. This could be a major bearish signal for the cross, but it all depends what numbers will be released and how will investors react to them.

Thursday will bring UK retail sales, while on Friday, the euro zone´s current account numbers are due. Both releases could influence the EURGBP cross.

EURUSD Technical Analysis

Technically speaking, the strong resistance is now at the 0.9 level and if the price jumps beyond, the Maginot line of selling orders between 0.9050 and 0.91 will be tested. Should the cross get above 0.91, the longer-term uptrend would be confirmed.

On the downside, the first bids could be located near 0.8950, where the medium-term uptrend line is located. If the price drops below this support, the short-term trend might switch back to bearish. targeting the 0.89 zone. Volatility could be elevated in the next week, due to the many major macro releases.

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