Chart of the Week - EURGBP
EUR: Muted Eurozone inflation; narrowing trade surplus: the final reading of Eurozone October HICP inflation was unrevised at 0.7% YOY (Sep: +0.8%) and similarly, the core reading was unchanged at 1.1% YOY (Sep: +1.0%), reflecting the ongoing lack of price pressure in the Euro area economy that has in part led to the ECB to add stimulus via deposit rate cut and a renewed Asset Purchase Program (APP). External trade weakened in September as exports recorded a 0.4% MOM decline (Aug: -0.5%) to mark its fourth straight contraction. Imports rebounded to increase 0.8% MOM (Sep: -0.2%), thus leaving trade surplus at a smaller €18.3b (Aug: €19.7b revised). Compared to the same period last year, exports continued to slip and at a larger margin of 1.6% YOY (Aug: -1.3%) while imports picked up 0.7% YOY (Aug: -1.7%), again reflecting weakness in the global trade sector.
GBP: GBP was supported on more headlines that reinforced the chances of a Tory majority government, and a commitment from the Tory candidates to back PM Johnson’s Brexit deal. UK house prices dropped in November: Property website Rightmove said that its house price index slipped 1.3% MOM in November (Oct: +0.6%) which left its annual gain at 0.3% YOY (Oct: -0.2%), not a surprise reading as demand is likely to remain subdued alongside the country’ Brexit conundrum.
From a technical and trading perspective, EURGBP looks poised to complete an AB=AD objective into a potential triple bottom towards .8450 this level also coincides with the monthly S1. I will be watching price action as we test this pivotal support area looking for bullish reversal patterns to set long positions targeting a symmetry swing objective towards the .8700 level where we may see a bearish reversal play develop, if this plays out I will cut long positions and vanture short to target a break of the .8450 level.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!