Current trend

The European currency shows ambiguous dynamics in the EUR/GBP pair during the morning session on August 23, consolidating near 0.8485 and local lows from August 2, renewed yesterday. Market activity decreased, as investors wait for new drivers to emerge, namely, speeches by representatives of global central banks at the annual Economic Symposium in Jackson Hole. In addition to the speech by US Fed Chairman Jerome Powell, they will pay attention to the rhetoric of Bank of England Governor Andrew Bailey, who may clarify the further prospects for monetary policy in the UK.

In the meantime, traders are assessing the UK macroeconomic statistics. Thus, the preliminary August manufacturing PMI changed from 52.1 points to 52.5 points and the service PMI from 52.5 points to 53.3 points with a forecast of 52.8 points, while the composite PMI changed from 52.8 points to 53.4 points instead of the expected 52.9 points. Thus, the activity of British business is recovering faster than experts expected, creating favorable conditions for further adjustment of monetary stimuli – economic growth is strengthening, employment indicators are improving, and inflation is actively slowing down. In turn, the EU August manufacturing PMI fell from 45.8 points to 45.6 points, the service PMI rose from 51.9 to 53.3 points, and the composite PMI from 50.2 points to 51.2 points. Despite the strong statistics, the mood of experts remains quite reserved. They point out that the positive changes are mainly due to the increase in the French services sector during the Olympic Games, and this effect will be temporary.

Today, the consumer confidence index from GfK Group was also published, which assesses the spending of residents of the United Kingdom, which is part of economic activity. The August value consolidated at –13.0 points, contrary to forecasts of reaching –12.0 points.

Support and resistance

On the daily chart, Bollinger bands show a sharp reversal to the downward plane: the price range expands from below but not as fast as the “bearish” sentiment develops. MACD maintains a strong sell signal below the signal line, preparing to test the zero mark for a downward breakout. Stochastic is close to the lows, indicating that the euro may become oversold in the ultra-short term.

Resistance levels: 0.8500, 0.8519, 0.8530, 0.8546.

Support levels: 0.8483, 0.8465, 0.8450, 0.8431.

Trading tips

Short positions may be opened after a breakdown of 0.8483, with the target at 0.8450. Stop loss – 0.8500. Implementation period: 2–3 days.

Long positions may be opened from 0.8483 with a breakout of 0.8500, with the target at 0.8530. Stop loss – 0.8483.