The British Pound maintains a positive sentiment against the Euro currency, after UK trade deficit narrowed to 9.094 billion in February from 9.463 billion pounds in January. German Trade Balance came out at 15.7B, lower than the expected 18.0B.
EUR/GBP is expected to slowly drift lower towards 0.8200 until tomorrow, when volatility will increase surrounding GBP Asset Purchase Facility, BOE Official Bank Rate statement, MPC Rate Statement and the G20 Meeting.
Technical Analysis
Until this week EUR/GBP was respecting the 61.8% Fibonacci retracement between 0.8157 and 0.84000. While bullish rejections have been restricted around 8.3000/10 and the 50 moving average on the 4H timeframe, the bullish scenarios remained intact as long as the pair didn’t close below the 0.8250.
0.8250 has turned into resistance, as price tested the level again from below. A secondary resistance is the 50 Simple Moving Average on 4H, currently at 0.8266, as price seems to respect it very well for this bearish moving.
This recent weakness suggests EUR/GBP will eventually target 100% down to 0.8157. Even so, the intermediary level between 0.8190-0.8200 can pose a problem and offer a decent support in the next trading sessions.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
