The ongoing trend

The EUR/GBP forex pair recorded moderate gains to 0.8328, recovering from mostly bearish trading this week that resulted in a retracement of the local lows of November 15.

The European Central Bank (ECB) seems to be managing to get a handle on high inflation in the euro area after all. But now the problem of stagnating domestic demand and the uncertain economic outlook in general is coming to the fore. Today, investors will focus on November economic statistics from Germany and the euro area, which could have a modest impact on the dynamics of the instrument: forecasts point to an increase in the S&P Global euro area services sector index from 51.6 to 51.8 points, while the manufacturing index is expected to remain unchanged at 46.0 points. In turn, the business activity index in the German services sector is expected to rise from 51.6 to 51.7 points and in manufacturing at 43.0 points. Market experts are trying to predict further steps of the monetary authorities: the head of the French central bank, Francois Villeroy de Galhau, commented on this issue yesterday, stating that the increase in trade tariffs under the administration of the newly elected US President Donald Trump will not change the inflation forecasts in the region and the regulator should continue the dovish cycle, the pace of which should, however, be determined by "flexible pragmatism". In addition, the monetary guardian added that the ECB can actually adjust the parameters in both directions.

Today at 11:30 (GMT 2) the UK will also release economic statistics: analysts expect the S&P Global Services Index to rise only slightly in November from 52.0 to 52.1 points, while the manufacturing indicator is expected to remain unchanged at 49.9 points. In addition, the market will receive data on retail sales for October, which may weaken to 3.4% year-on-year from 3.9%, contracting by 0.3% after rising by 0.3% month-on-month, while the figure excluding fuels is likely to decline to 3.3% from 4.0%.

British investors have at their disposal the consumer confidence index of the analyst portal Gfk Group: in November it rose from -21.0 points to -18.0 points, contrary to forecasts of -22.0 points. Ben Jones, analyst at the Confederation of British Industry (CBI), commented on the data, saying that the decline was still influenced by the outcome of the US election, which led to a reduction in customer activity. However, in his opinion, the situation may change as early as the next quarter. Market participants also paid attention to the data on public borrowing in Great Britain, which exceeded experts' estimates: in October alone, the indicator amounted to 17.4 billion pounds, taking it second in the ranking of the highest values since the start of publication of these statistics in 1993, and the total volume for the first seven months of the fiscal year was recorded in the region of 96.6 billion pounds, which is 1.1 billion pounds more than in the same period last year.

support and resistance

Bollinger Bands are moving slightly downwards on the daily chart: the price range is narrowing, reflecting mixed trading in the short term. The MACD indicator turned downwards and provided a new sell signal (the histogram is trying to consolidate below the signal line). The Stochastic oscillator followed a strong downtrend, but quickly approached the 20 mark, indicating the risks of the oversold common currency in the ultra-short term.

Supports: 0.8310, 0.8294, 0.8280, 0.8259.

Resistances: 0.8326, 0.8340, 0.8350, 0.8359.

trading tips

Short positions are relevant after the robust downward breakout of the 0.8310 mark with a price target of 0.8280 and a stop loss at 0.8326. Validity: 2-3 days.

The return of bullish momentum with the upward breakout of 0.8340 signals long positions with a target of 0.8370 and a stop loss at 0.8326.