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EUR/GBP Overview & Technical Analysiss

Fundamental Summary

EUR

In July, Germany's trade surplus decreased as exports declined faster than imports. According to figures from the German statistics office issued on Friday, Germany's trade surplus decreased from a EUR6.2 billion surplus in June to EUR5.4 billion in seasonally adjusted terms. The number beat experts' expectations, who had projected a July surplus of EUR4.8 billion. Furthermore, Key German manufacturing dropped to 49.1 from 49.3 due to supply chain difficulties and some input price pressures, performing worse than expected. Given that Germany is the largest economy in Europe, negative information about the country may cast a shadow over regional growth expectations. Additionally, Eurostat publishes its report on the eurozone labor market. As expected, In July 2022, the eurozone unemployment rate was 6.6%, down from 6.7% in June 2022. The Unemployment Rate gauges the proportion of the labor force that was out of work and actively looking for jobs during the previous month.

GBP

U.K manufacturing PMI for August was up from 46 to 47.3, above market expectations. Trading experts pay close attention to these surveys because purchasing managers frequently have early access to information regarding firm performance, which may be a leading predictor of economic growth. Moreover, U.K. Services Purchasing Managers' Index (PMI) surprised with a fall to a seasonally adjusted 52.5 in August from a 52.6 final in July. Analysts predicted that the reading would be 52.0 points. The 50-mark separates deterioration from improvement. Additionally, The Composite Purchasing Managers Index compiled by S&P Global fell to 50.9 from 52.1 in July, undervalued market expectations to 51.3. The Composite PMI Index measures the activity level of purchasing managers in both sectors.

Our Opinion

Given the current balance of positive and negative influences affecting the EUR/USD and as long as the Fed maintains its aggressive policy and cyclical worries put pressure on risky assets, the fundamental outlook for the EUR is "NEUTRAL" and for the GBP is "BULLISH".

Technical Analysis

After making a pullback move from Thursday's high of 0.8670, the EUR/GBP pair is presenting a balanced market picture. The asset is trading in a limited range of 0.8608-0.8618 and a significant move is expected soon as investors turn their focus to the European Central Bank's interest rate decision next week. Following the pivot around the 50-day simple moving average (SMA) and the resistance trendline drawn from 0.8677, the ascent gained traction. The issue now is whether the rapid recovery will continue at its current rate. According to the momentum indicators, the market has not yet verified overbought conditions because the RSI is still below 70 and the Stochastics have just recently crossed over 80. However, given that the price has closed well above the upper Bollinger band, as it did in mid-June, a negative correction would not be unusual.

Bearish 57
Close Price 216.3
52W Low 157.0
52W High 292.55
5D MA 215.82
50D MA 195.76
200D MA 216.62
MACD 5.53
RSI 77.16
STOCH 80.91

This report, prepared and provided by Deshe Labs Ltd ("Deshe"), is intended for general guidance and information purposes only and under no circumstances is tailored to a specific factor or variable related to its reader or intended to be used, construed, or considered as financial or investment advice, an offer, a solicitation of any offer, a recommendation, or an offer to invest in, sell or buy the securities mentioned in this report or other form of a financial asset or as a marketing communication under FCA Rules. For the full disclaimer, click here.