Current trend

The EUR/GBP pair is showing weak growth, developing the "bullish" corrective dynamics of the current week and staying close to the local highs of October 17.

Investors are focusing on October business activity statistics in the EU and UK, which were published the day before. The S&P Global Services PMI in the eurozone fell from 51.4 points to 51.2 points, while analysts expected 51.6 points, the Manufacturing PMI increased from 45.0 points to 45.9 points with a forecast of 45.1 points, and the Composite Manufacturing PMI adjusted from 49.6 points to 49.7 points, which coincided with market estimates. In turn, the British business activity statistics turned out to be much weaker: the Manufacturing PMI fell from 51.5 points to 50.3 points, while experts expected 51.4 points, the Services PMI slowed from 52.4 points to 51.8 points with expectations of 52.2 points, and the Composite PMI from S&P Global/CIPS fell from 52.6 points to 51.7 points. Meanwhile, moderate pressure on the position of the British currency today is being exerted by data on the dynamics of Consumer Confidence: the index from the analytical portal Gfk Group in October was adjusted from –20.0 points to –21.0 points.

Investors continue to assess the outlook for monetary policy in the eurozone, with traders still expecting a more rapid decline in borrowing costs from the European Central Bank (ECB), while expectations for more aggressive monetary easing from the US Federal Reserve are changing as hopes for Donald Trump's victory in the upcoming presidential election on November 5 grow. At the same time, this week, ECB President Christine Lagarde noted that decisions on the interest rate have not yet been made, and the regulator needs to exercise caution in any adjustments to monetary policy. Some representatives of the European regulator are speaking out more harshly: for example, the Governor of Banco de Portugal, Mário Centeno, spoke in favor of reducing the rate by 50 basis points at once at the ECB meeting on December 12.

Support and resistance

Bollinger Bands on a daily chart demonstrate a moderate decrease. The price range is narrowing, being spacious enough for the current activity level in the market. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic shows similar dynamics; however, it is rapidly approaching its highs, indicating the risks of the single currency being overbought in the ultra-short term.

Resistance levels: 0.8350, 0.8359, 0.8370, 0.8384.

Support levels: 0.8338, 0.8326, 0.8310, 0.8294.

Trading tips

Long positions can be opened after a breakout of 0.8350 with the target of 0.8370. Stop-loss — 0.8338. Implementation time: 2-3 days.

A rebound from 0.8350 as from resistance, followed by a breakdown of 0.8338 may become a signal for opening of new short positions with the target at 0.8310. Stop-loss — 0.8350.