Current dynamics

The EUR/GBP pair is showing moderate gains around 0.8328, recovering from mostly bearish trading this week that saw it update local lows since November 15.

The ECB seems to be able to manage high inflation, but the problem of sluggish domestic demand and the generally uncertain economic outlook is now beginning to surface. Today, investors’ attention will be focused on November business activity statistics from Germany and the eurozone, which could have a restraining effect on the dynamics of the instrument: the S&P Global eurozone service sector index is expected to increase from 51.6 to 51.8, while the manufacturing sector index is expected to remain stable at 46.0. In turn, the German service sector business activity index is likely to rise from 51.6 to 51.7, while the manufacturing sector index will remain stable at 43.0. Market experts are trying to predict the next steps of the monetary authorities. The President of the Bank of France, François Villeroy de Galhau, expressed his view on the issue yesterday, saying that the increase in trade tariffs under the administration of newly elected US President Donald Trump will not change the inflation outlook in the region. Regulators should continue their “monetary easing” cycle, but its pace should be determined by “flexible pragmatism”. In addition, the official added that the ECB could adjust the criteria in any direction.

Today at 11:30 (GMT 2) UK business activity statistics will be released: analysts expect only a slight increase in the S&P Global Services Index in November from 52.0 points to 52.1 points, while the index in the manufacturing sector is expected to remain unchanged at 49.9 points. In addition, the market will receive October data on retail sales, which may slow from 3.9% to 3.4% on an annual basis and fall by 0.3% after growing by 0.3% on a monthly basis, while the figure excluding fuel is likely to fall from 4.0% to 3.3%.

British investors have the consumer confidence index from the analytical portal Gfk Group, which rose in November from -21.0 points to -18.0 points, contrary to expectations of -22.0 points. Commenting on the data, Ben Jones, an analyst at the Confederation of British Industry (CBI), said that the decline in values ​​​​is still influenced by the results of the US elections, which led to a restriction in client activity. However, according to him, the situation may change in the next quarter. Market participants also drew attention to the data on government borrowing in the UK, which exceeded experts' calculations: in October alone, the figure amounted to £ 17.4 billion, taking the second place in the ranking of the maximum since the publication of these statistics in 1993, and the total volume for the first seven months of the tax year amounted to £ 96.6 billion, an increase of £ 1.1 billion compared to the same period last year.

Support and resistance levels

The Bollinger Bands on the daily chart are showing a moderate decline as the price range narrows, reflecting mixed trading in the short term. The MACD is turning bearish, forming a new sell signal (the chart is trying to consolidate below the signal line). The Stochastic maintains a confident downtrend, but is rapidly approaching the "20" mark, indicating the risk of overselling the single currency in the very short term.

Resistance levels: 0.8326, 0.8340, 0.8350, 0.8359.

Support levels: 0.8310, 0.8294, 0.8280, 0.8259.

Trading Tips

Short positions can be opened after a confident breakout of the 0.8310 level to the downside with a target of 0.8280. Stop loss - 0.8326. Execution period: 2-3 days.

The return of bullish dynamics to the market followed by a breakout of the 0.8340 level upwards may become a signal to open long positions with a target at 0.8370. Stop loss - 0.8326.