By FXEmpire.com
Trading in the EURGBP developed in almost complete lethargy. The pair traded in an extremely tight sideways trading range close to the 0.80. The euro crisis was still the key subject in the financial news. However, there was no high profile news enough to inspire another directional move in the EURGBP, that was until Egan Jones issued their credit downgrade and on a slow news day all eyes refocused on Spain.
BoE’s Dale in an interview repeated that BoE policy is already very stimulatory. So, he is in no hurry to take additional action. The headlines had no impact on sterling trading. At noon, the CBI sales were reported much stronger than expected. The euro was already under moderate pressure at that time and EUR/GBP tested the intraday lows.
The UK data were not enough to really trigger a move beyond the recent lows. For that, a broader decline of the euro was apparently needed. Such a move occurred late in the session. EURGBP reached a minor new low at 0.7982, but once a gain there was no follow-through price action. EURGBP closed the session at 0.7992, compared to 0.7997 on Monday evening.
Today, the UK mortgage and lending data will be published. Usually, these data series have only limited impact on currency trading. We don’t expect the market to behave different today. Global factors and the news headlines from Europe will continue to set the tone, also for EURGBP trading.
All markets will be watching Spain closely and hoping for some word from the ECB, who are expected to meet today to discuss a rescue play for Spain. The Spanish Prime Minister has introduced a plan for Spain to recapitalize the banks themselves and the use the assets to borrow from the ECB, he says it is not a bailout, but a bailout is a bailout no matter how it is structured. Isn’t lovely how politicians manipulate words and definitions to hide behind technicalities. Well that said, Spain will be the focus of the global markets today
From a technical point of view, the EUR/GBP cross rate is showing tentative signs that the decline is slowing. Early May, the key 0.8068 support was cleared. This break opened the way for return action to the 0.77 area (October 2008 lows). Two weeks ago, the pair set a correction low at 0.7950. From there, a rebound kicked in/short squeeze kicked in. The pair broke temporary above the MTMA, but the gains could not be sustained. Continued trading above the 0.8095 area (gap) would call off the downside alert. A first attempt to do so was rejected early last week. A further setback in the 0.7950/0.8100 trading range is favored.
Click here a current EUR/GBP Chart.
Originally posted here
