EUR/GBP has been quite impulsive and non-volatile amid the recent bearish bias which led the price to reside below 0.8850 with a daily close. GBP has been dominating EUR for a certain period which came to a strong counter after the worse reports of GBP started to unfold this week.
This week UK GDP report was published with a decrease to 0.0% from the previous value of 0.4% which was expected to be at 0.1%, Manufacturing Production decreased to -0.2% from the previous value of 0.0% which was expected to increase to 0.1% and Construction Output decreased significantly to -0.7% from the previous positive value of 0.5% which was expected to be at -0.4%. Moreover, Bank of England's Governor Carney had a speech recently, expanding on further economic development and tackling the BREXIT situation in the coming days. The speech aroused mixed responses from the market. Mostly it is expected to have a positive influence on the GBP dynamic.
On the EUR side, there are certain stability risks, emerging for the eurozone in the coming days, which should be taken seriously to take proper steps to overcome them in the right time. Amid the recent downbeat reports from the UK, EUR is expected to gain momentum for a short to medium-term period. This week EUR has been quite impressive thanks to the recent economic reports which helped the currency to gain impulsive momentum over GBP. Today German Final CPI report was published unchanged as expected at 0.4% and Industrial Production was better-than-expected at 1.0%, increasing from the previous value of -0.7% which was expected to be at 0.4%.
Meanwhile, EUR is expected to gain certain momentum over GBP in the coming days. On the other hand, GBP may take the lead again to push the price lower in the long term as fundamentals suggest.
Now let us look at the technical view. The price has formed a Bullish Divergence recently which is expected to lead the price towards 0.8850 before it continues with the bearish trend after rejecting off the area with a daily close. As the dynamic level of 20 EMA is also quite far from the current market price, a retracement is more probable. However, as the price remains below 0.8950 area, the bearish bias is expected to continue.
SUPPORT: 0.8500, 0.8700
RESISTANCE: 0.8850, 0.8950
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