- EUR / GBP captures some buying on Friday, although it lacks strong continuation.
- The optimistic UK PMIs acted as a tailwind for the British pound and limited the pair’s gains.
- The mixed media setup warrants caution for aggressive investors before opening new positions.
The crossing EUR/GBP has returned initial gains to an intraday high of 0.8453 and is stable, around the region of 0.8435-30, after the publication of the Eurozone and UK PMIs.
Having found decent support near the 0.8420-15 region, the EUR / GBP cross has gained some positive traction on Friday and has once again approached the upper limit of its weekly trading range. The common currency got some support from a subdued action in the price of the US dollar and did not appear to be affected by the mixed release of preliminary eurozone PMI figures for October.
The IHS / Markit preliminary report showed that the indicator that measures the activity of the manufacturing sector in Germany and the eurozone was slightly better than expectations from the market for October. The details reveal that supply bottlenecks continue to weigh on manufacturing output. Conversely, services PMI fell to six-month lows during the reported month.
On the other hand, both UK manufacturing and services PMIs posted better-than-expected growth during the current month. This, to a greater extent, overshadowed the dismal UK retail sales figures released earlier this Friday and acted as a tailwind for the British pound. This, in turn, was seen as a key factor limiting any significant rally for the EUR / GBP cross.
From a technical perspective, the intraday positive movement weakened near the resistance of a week-old trading range. That said, acceptance above the 200 hourly SMA favors the bulls. However, it will remain prudent to wait for a strong continuation buy before confirming that the EUR / GBP has bottomed out and positioned for additional gains.
EUR / GBP technical levels
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