Forex Market: EUR/GBP daily trading forecast

Friday’s trade saw EUR/GBP within the range of 0.7958-0.7910. The pair closed at 0.7912, losing 0.45% on a daily and 1% on a weekly basis.

At 8:07 GMT today EUR/GBP was down 0.22% for the day to hit a session low of 0.7894, the lowest since July 24th, having broken the first daily pivot support. Days high stood at 0.7917.

German economic growth

Destatis reported at 06:00 GMT today that the German economy matched projections and expanded at an annualized 0.8% rate in the second quarter, the lowest rate of growth since Q1 2013. This also matched a preliminary reading released on August 14th and trailed the preceding three months’ 2.5% expansion.

Quarter-on-quarter, the leading EU economy shrank by 0.2%, as expected, matching the preliminary reading and trailing the first quarter’s 0.7% growth.

Eurozone factory growth

Spain’s manufacturing activity growth eased in August, as anticipated, with the Spanish Manufacturing Purchasing Managers’ Index sliding to 52.8, marking a slowdown from 53.9 in July. Analysts had projected a drop to 53.1. This, however, was Spains ninth straight month of factory growth.

Activity in Italy’s sector of manufacturing unexpectedly contracted in August, with the corresponding PMI registering at a reading of 49.8, from 51.9 in May. Economists had projected a growth of 50.8. Values below the key level of 50.0 indicate decreased activity.

France’s final manufacturing PMI remained in the zone of contraction this month, but came in better than the preliminary PMI reading of 46.5, which was reported on August 21st. Frances Final Manufacturing PMI registered at 46.9 from 47.8 in July. This was the fourth straight month of contraction.

The final reading of Germany’s manufacturing PMI also disappointed, having trailed both the preliminary and last months value. Germanys factory growth came in at 51.4, down from 52.4 in July, and compared to preliminary estimates for a minor drop to 52.0.

The final manufacturing PMI in the Euro zone also trailed both the preliminary value and projections. The index fell to a 13-month low of 50.7, compared to the flash reading of 50.8 released earlier in August, and down from 51.8 in July. The PMI is based on a monthly survey, encompassing a sample of business entities, which represents private sector conditions in terms of new orders, output, employment, prices etc. Higher-than-expected readings would provide support to the common currency.

United Kingdom

Activity growth in United Kingdom’s sector of manufacturing probably slowed down in August, with the corresponding Markit/CIPS PMI expected to come in at a reading of 55.0, according to the median forecast of experts, down from 55.4 in July.

The index is based on a survey conducted among managers of companies. They are asked about their estimate in regard to current business conditions in the sector in terms of new orders, output, employment, demand in the future. Values above the key level of 50.0 signify that activity in the sector has expanded. Higher than projected PMI readings would certainly heighten the appeal of the sterling. The Chartered Institute of Purchasing and Supply (CIPS) is expected to announce the official reading at 8:30 GMT.

A separate preliminary report prepared by the Office for National Statistics is projected to show that Business Investment rose in the second quarter, but at a slower pace compared to the preceding three months. A growth of 2% is expected, down from 5% in the previous three months.

Julys mortgage approvals, reported by Bank of England, are expected to come in at 67 000, the same as in June, while consumer credit loaned out is expected to have risen to 550 million pounds, up from 420 million in June.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7927. In case EUR/GBP manages to breach the first resistance level at 0.7943, it will probably continue up to test 0.7975. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7991.

If EUR/GBP manages to breach the first key support at 0.7895, it will probably continue to slide and test 0.7879. With this second key support broken, movement to the downside will probably continue to 0.7847.

The mid-Pivot levels for today are as follows: M1 – 0.7863, M2 – 0.7887, M3 – 0.7911, M4 – 0.7935, M5 – 0.7959, M6 – 0.7983.

In weekly terms, the central pivot point is at 0.7937. The three key resistance levels are as follows: R1 – 0.7965, R2 – 0.8019, R3 – 0.8047. The three key support levels are: S1 – 0.7883, S2 – 0.7855, S3 – 0.7801.