Forex Market: EUR/GBP daily forecast

During yesterday’s trading session EUR/GBP traded within the range of 0.7951-0.7980 and closed at 0.7956.

At 7:24 GMT today EUR/GBP was gaining 0.05% for the day to trade at 0.7961. The pair touched a daily high at 0.7966 at 7:12 GMT.

Fundamental view

Euro zone

Activity in Italys sector of services probably expanded in June, with the corresponding PMI coming in at a reading of 52.3, as expected by experts, from 51.6 in May. Values above the key level of 50.0 indicate increased activity. Markit Economics is expected to release the official data at 7:45 GMT.

Frances final services PMI probably remained in the zone of contraction during June, while confirming the preliminary PMI reading of 48.2, which was reported on June 23rd. The official reading is due out at 7:50 GMT.
The final reading of German services PMI probably confirmed the preliminary value for June, with the index coming in at 54.8. Markit will release the official reading at 7:55 GMT.

The final services PMI in the Euro zone probably also confirmed the preliminary value for June, with the index remaining at 52.8. The official reading is scheduled to be released at 8:00 GMT. 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.

Annualized retail sales in the Euro region as a whole probably rose 2.0% in May, according to the median forecast by experts, after in April sales climbed 2.4%. In monthly terms, retail sales probably increased 0.3% during May. This is a short-term indicator, which provides key information about consumption on a national scale. In case the index of retail sales rose 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 (ECB) is to announce its decision in regard to borrowing costs. The median estimate by experts suggests that the central bank will probably maintain its benchmark interest rate at the record low level of 0.15% at the policy meeting today. The ECB cut borrowing costs by 0.10% at its prior meeting on June 5th. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank is dovish about inflationary pressure in Euro zones economy and thus, either puts interest rates on hold, or reduces them, this will usually have a bearish effect on the common currency.

The interest rate decision is to be followed by the press conference with ECB President Mario Draghi, at which he takes a statement on monetary policy. During this event volatility of euro crosses is usually high. In case Draghi offers a more hawkish tone, the euro will usually receive support, while a more dovish tone will have a bearish effect on the currency. The press conference is scheduled at 12:30 GMT.

United Kingdom

Activity in United Kingdom’s sector of services was probably slightly lower in June, with the corresponding PMI coming in at 58.0, down from 58.6 in May. 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. Higher than projected readings would certainly heighten the appeal of the pound. The Chartered Institute of Purchasing and Supply (CIPS) is to announce the official reading at 8:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/GBP manages to breach the first resistance level at 0.7974, it will probably continue up to test 0.7991. In case the second key resistance is broken, the pair will probably attempt to advance to 0.8003.

If EUR/GBP manages to breach the first key support at 0.7947, it will probably continue to slide and test 0.7933. With this second key support broken, the movement to the downside will probably continue to 0.7916.