Forex Market: EUR/GBP daily forecast

During yesterday’s trading session EUR/GBP traded within the range of 0.8120-0.8150 and closed at 0.8126.

At 6:30 GMT today EUR/GBP was losing 0.01% for the day to trade at 0.8123. The pair touched a daily low at 0.8119 at 3:25 GMT.

Fundamental view

Euro zone

Annualized retail sales in the Euro region as a whole probably rose 1.2% in April, according to the median forecast of experts, after in March sales climbed 0.9%. In monthly terms, retail sales probably remained flat in April. This is a short-term indicator, which provides key information about consumption on a national scale.

In case the index of retail sales rises at a faster than projected pace, this would have a bullish effect on the euro. Eurostat is expected to publish the official data at 9:00 GMT.

At 11:45 GMT the European Central Bank will announce its decision on borrowing costs. The benchmark interest rate will probably be cut to 0.1% from 0.25% at the policy meeting, according to the median estimate by experts. A cut in rates would have a bearish effect on the 18-nation common currency.

The decision on policy will be followed by a press conference with ECB President Mario Draghi, scheduled at 12:30 GMT. Market volatility during this event is usually high.

United Kingdom

At 11:00 GMT Bank of England is to announce its decision on monetary policy. The benchmark interest rate will probably be left unchanged at 0.50%. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank left intact or raised borrowing costs, this would have a bullish effect on the sterling.

At the same time, the monthly pace of bank’s monetary stimulus will probably be left intact as well, at 375 billion GBP. The central bank issues new money in order to purchase gilts from private investors such as pension funds and insurance companies. In case monetary stimulus is increased (in order to further spur economic growth), this will usually devalue nation’s currency.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/GBP manages to breach the first resistance level at 0.8144, it will probably continue up to test 0.8162. In case the second key resistance is broken, the pair will probably attempt to advance to 0.8174.

If EUR/GBP manages to breach the first key support at 0.8114, it will probably continue to slide and test 0.8102. With this second key support broken, the movement to the downside will probably continue to 0.8084.