By FX Empire.com

Economic Events:

Jan 16
00:01 United Kingdom

Rightmove House Price Index (MoM) (Jan)

 -2.7% 1
00:01 United Kingdom

Rightmove House Price Index (YoY) (Jan)

 1.5% 2
07:00 Germany

Wholesale Price Index (MoM) (Dec)

 0.7% 2
07:00 Germany

Wholesale Price Index (YoY) (Dec)

 4.9% 2
Jan 17
09:30 United Kingdom

Consumer Price Index (MoM) (Dec)

 0.2% 2
09:30 United Kingdom

Consumer Price Index (YoY) (Dec)

 4.2% 4.8% 2
09:30 United Kingdom

Core Consumer Price Index (YoY) (Dec)

 3.0% 3.2% 3
09:30 United Kingdom

DCLG House Price Index (YoY) (Nov)

 -0.4% 1
09:30 United Kingdom

Retail Price Index (MoM) (Dec)

 0.2% 1
09:30 United Kingdom

Retail Price Index (YoY) (Dec)

 4.8% 5.2% 1
10:00 United Kingdom

BoE’s Governor King Speech

 3
10:00 United Kingdom

CB Leading Indicator Index (Dec)

 -0.4% 2
10:00 Germany

ZEW Survey – Current Situation (Jan)

 26.8 2
10:00 Germany

ZEW Survey – Economic Sentiment (Jan)

 -49.1 -53.8 2
Jan 18
09:30 United Kingdom

Average Earnings excluding Bonus (3Mo/Yr) (Nov)

 1.8% 2
09:30 United Kingdom

Average Earnings including Bonus (3Mo/Yr) (Nov)

 2% 2% 2
09:30 United Kingdom

Claimant Count Change (Dec)

 6.3K 3.0K 3
09:30 United Kingdom

Claimant Count Rate (Dec)

 5% 2
09:30 United Kingdom

ILO Unemployment Rate (3M) (Jan)

 8.3% 8.3% 2
Jan 20
07:00 Germany

Producer Price Index (MoM) (Dec)

 0.1% 0.1% 2
07:00 Germany

Producer Price Index (YoY) (Dec)

 5.2% 2
09:30 United Kingdom

Retail Sales (MoM) (Dec)

 0.6% -0.4% 1
09:30 United Kingdom

Retail Sales (YoY) (Dec)

 0.7% 2
09:30 United Kingdom

Retail Sales ex-Fuel (MoM) (Dec)

 -0.7% 1
09:30 United Kingdom

Retail Sales ex-Fuel (YoY) (Dec)

 0.5%

Historical:

Highest: 1.2336 EUR on 29 Jun 2010.

Average: 1.1548 EUR over this period.

Lowest: 1.0686 EUR on 13 Oct 2009.

Resistance : .839

Support: .8325

Rule:

EUR/GBP: The cross tends to move in ranges, with relatively clear barriers. The narrower ranges made it somewhat harder, but it seems to return to wider ranges. The GBP is does not seem to move in response to the EUR as directly currently. The UK austerity program vs. The EU debt crisis seems to have them moving in opposing distances. They are developing new trading personalities and there is a good deal of profit to be made trading this pair. They can be volatile.

Characteristics
Average broker spread: 2-3 pips
Daily range average : 25-50 pips

What moves EUR/GBP?

  • The interest rate differential between the European Bank(ECB) and the Bank of England(BoE)
  • European and UK economic data
  • Growth differentials between the Euro zone and UK


Trading the EUR/GBP

Applying Technical Analysis and Analyzing Fundamental News from the Euro and UK zone. EUR/GBP is excellent for the beginning forex trader because it’s low volatility.

Analysis and Recommendations

This cross pair, is in a strange position. The GBP was one of the worse performing currencies last week and there is no good news ahead, but the euro is in worse shape with the downgrades of many EU countries and the uncertainty in regards to the bond ratings for the new EU bonds, that are to be sold to fund the emergency fund for the EU debt crisis and banking liquidity. If the downgrade by S&P effects the rating on the bonds, the markets could tumble, as it will make it impossible for the EU to raise the capital needed.

There is also a new problem facing Greece, Spain and Italy, with lower ratings, means higher yeilds.

The euro plunge may give some life to the Sterling. If the Sterling breaks free on Monday and moves upwards, it might turn into a profitable trade. If the GBP turns positive, it might break above the support level at touch under .84.

Originally posted here