Forex Market: EUR/GBP daily trading forecast

Yesterday’s trade saw EUR/GBP within the range of 0.7855-0.7810. The pair closed at 0.7840, gaining 0.32% on a daily basis.

At 7:46 GMT today EUR/GBP was up 0.14% for the day to trade at 0.7851. The cross held in a daily range of 0.7837-0.7859.

Fundamental view

Eurozone

Markit Economics is expected to report that activity in the Eurozone’s services sector grew in October at the same pace as a month earlier, with the respective Services Purchasing Managers’ Index projected to come in at 52.4. Meanwhile, the Markit Composite PMI will likely confirm a preliminary reading of 52.2, inching up from 52.0 in September. The reports are due at 09:00 GMT.

Annualized retail sales in the Euro region as a whole probably rose 1.2% in September, according to the median forecast by experts, after scoring a 1.9% jump in August. This would be the ninth straight month of annualized gains.

In monthly terms, retail sales probably dropped 0.8% in September, reversing a 1.2% gain a month earlier. If confirmed, this would be the sharpest decline since December 2013.

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 10:00 GMT.

Within the Eurozone, Spain’s services sector probably grew at a faster pace in October, with the relative Spanish Services PMI projected to come in at 56.0 compared to 55.8 in September, which would be the 12th straight monthly expansion.

Activity in Italy’s services sector probably contracted at a slower pace, but nevertheless for the third straight month. The Italian Services PMI, prepared by Markit, will likely register at 49.2 compared to 48.8 in September.

France’s services sector probably contracted for a second month, and at an accelerating pace. The French services PMI will likely come in at 48.1, confirming a preliminary reading, and further slowing down from 48.4 in September.

Germany, Europe’s leading economy, is expected to see its 17th straight month of services sector growth, albeit continuing a recent slowdown trend. The respective German Services PMI will register at 54.8 in October, according to analysts’ forecasts, confirming a preliminary reading but trailing September’s final value of 55.7.

United Kingdom

Activity in the United Kingdom’s sector of services probably expanded at a slightly slower pace in October, with the corresponding PMI projected to come in at 58.5 from 58.7 in September. If confirmed, this would be the 22nd straight monthly expansion.

The index is based on a survey, encompassing managers of companies that operate in sectors such as transportation, communications, IT, financial intermediation, tourism. They are asked about their estimate regarding current business conditions (new orders, output, employment, demand in the future). Values above the key level of 50.0 signify that activity in the sector has expanded. A larger-than-projected fall in the index value would certainly lower the appeal of the pound. The Chartered Institute of Purchasing and Supply (CIPS) is to announce the official reading at 9:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7835. In case EUR/GBP manages to breach the first resistance level at 0.7860, it will probably continue up to test 0.7880. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7905.

If EUR/GBP manages to breach the first key support at 0.7815, it will probably continue to slide and test 0.7790. With this second key support broken, the movement to the downside will probably continue to 0.7770.

The mid-Pivot levels for today are as follows: M1 – 0.7780, M2 – 0.7803, M3 – 0.7825, M4 – 0.7848, M5 – 0.7870, M6 – 0.7893.

In weekly terms, the central pivot point is at 0.7856. The three key resistance levels are as follows: R1 – 0.7891, R2 – 0.7953, R3 – 0.7988. The three key support levels are: S1 – 0.7794, S2 – 0.7759, S3 – 0.7697.