EURGBP has been trading with clear upwards direction in August above 0.9000. The pairing is in a correction mode back to 50-period MA in the 4-hour chart, before retrace again further up on making the new higher high of the month. The cross closed above 0.9131 on Friday, which made last week the third consecutive week of incline, while it is currently at the fourth straight month of gains. Over the last month, the pound has fallen by an average 2.7% against the dollar, euro and yen, which has occurred with the UK economy in relative stagnation, associated with Brexit concerns.
Regarding Brexit procedure: Slovenian PM Miro Cerar has warned yesterday about the timetable of negotiations in an interview with the Guardian newspaper, specifically saying that time when trade negotiations can start will have to be pushed out beyond the pencilled-in October start date. The EU has insisted that “sufficient progress” must be made on divorcing terms — financial arrangements, citizen rights, and the Irish border — before talks on trade can commence. Cerar warned that “the process will definitely take more time than we expected at the start of the negotiations,” calling for “optimism on realistic grounds.” He also criticised the UK government’s paper on potential future customs arrangements, which was published last week, saying it was “not realistic” as it amounted to “cherry-picking,” which the EU has repeatedly stressed there cannot be (on the grounds that out means out).
Hence on the belief of the bearish view of sterling will continue, a Long Position was taken in the hourly chart, after the downwards correction seems to be finished, with the last full body bullish hourly candle, breaking the 20-period MA. In the hourly chart, the cross has lifted back above 20- period MA after dipping again to the 50-period MA at 0.9110. Meanwhile , in the 4-hour chart, the 50-period MA seems to satisfy the pair quite well as a support level and therefore is was used as a support level in our today’s trade at 0.9089.
Entry was at 0.9133, which was the last hourly opening price after the break of 20-period MA. The targets have been set by measuring the length of the last upwards movement in the hourly chart. (Friday’s Lowest- and Highest price). Therefore this distance was used in today’s low along with Fibonacci retracement. Hence Target 1 is at 38.2 Fibonacci level , at 0.9145 and the 2nd one at 0.9160, which is in the middle of 0.0 and 23.6 levels.
The UK calendar this week is relatively quiet, highlighted by second estimate Q2 GDP data (due Thursday), which is likely to confirm growth at 0.3% q/q, half the Eurozone growth figure for the same quarter. The August industrial trends and distributive sales surveys are also out from the CBI.
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