Forex Market: EUR/GBP daily trading forecast

Yesterday’s trade saw EUR/GBP within the range of 0.7986-0.8041. The pair closed at 0.8005, losing 0.17% on a daily basis.

At 7:10 GMT today EUR/GBP was up 0.05% for the day to trade at 0.8009. The pair touched a daily high at 0.8014 at 7:12 GMT.

Fundamentals

Euro zone

Manufacturing data – preliminary release

Frances manufacturing PMI probably remained in the zone of contraction for a seventh consecutive month in November, with the preliminary index estimate being at 48.8, acording to the median forecast by experts. The final PMI stood at 48.5 in October, as reported on November 3rd, up from a preliminary reading of 47.3. Values below the key level of 50.0 indicate that the majority of respondents in the survey expressed pessimism in regard to activity in the sector. Markit Economics is expected to release the official data at 8:00 GMT.

French preliminary services PMI probably slightly improved to 48.5 in November from a final reading of 48.3 in the prior month. If so, this would be the third consecutive month, during which the index inhabited the zone below 50.0. Markit will publish the preliminary data at 8:00 GMT.

German manufacturing PMI probably remained above 50.0 for a second consecutive month in November, with the preliminary index value improving to 51.5, from a final reading of 51.4 in October, as reported on November 3rd. If so, this would be the highest index reading since July, when the final PMI was reported at 52.4. The preliminary value is due out at 8:30 GMT.

Activity in German services sector was probably little changed in November, with the preliminary PMI climbing to 54.5 from a final reading of 54.4 in October. If so, this would be the eighteenth consecutive month, when the PMI stood in the zone of expansion. The preliminary data is to be released at 8:30 GMT.

Manufacturing activity in the whole Euro region probably improved in November, with the preliminary Purchasing Managers Index rising to 50.8 from a final value of 50.6 during the preceding month. If so, this would be the highest reading since July, when the final index was reported at 51.8, and also a seventeenth consecutive month of expansion. The PMI reflects the performance of the manufacturing sector in the area and is based on a survey of 3 000 manufacturing companies. National data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. These member states together account for almost 90% of Euro zones manufacturing activity. The Manufacturing Purchasing Managers Index is comprised by five individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stock of Items Purchased (10%), as the Delivery Times index is inverted, so that it moves in a comparable direction. The preliminary data is expected at 9:00 GMT.

The preliminary services PMI in the Euro zone was probably little changed in November, reaching a level of 52.4. In October the final reading of the index was reported to have been at 52.3. If market expectations were met, this would be a sixteenth consecutive month, during which the index stood above the key level of 50.0. The PMI is based on data collected from a representative panel of around 2 000 private service sector companies. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The survey represents private sector conditions in terms of new orders, output, employment, prices etc. Markit will release the preliminary data at 9:00 GMT.

A larger-than-expected improvement in any of the PMI readings would certainly provide support to the common currency.

Consumer Confidence

Confidence among consumers in the Euro area probably improved in November. The preliminary value of the consumer confidence index probably rose to -10.7, or the highest since August, from a final reading of -11.1 in October, as reported on October 30th. The final index for September came in at -11.4. The indicator measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. The index reflects the level of optimism, which consumers have about economic development in the region. The Business and Consumer Survey is conducted by phone and includes 23 000 households in the Euro zone. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. This indicator is one of the five major components, that comprise the Economic Sentiment Indicator (ESI).

Higher confidence usually implies greater willingness to spend, including large-ticket purchases, while consumer spending is a key factor behind economic growth. Therefore, in case the gauge of confidence increased more than anticipated, this would cause a bullish impact on the euro. The European Commission is expected to release the preliminary data at 15:00 GMT.

United Kingdom

Retail Sales

Annualized retail sales in the United Kingdom probably rose at a rate of 3.8% in October, according to the median forecast by experts, after in September sales climbed 2.7%. If so, this would be the fastest annual rate of increase since April, when the index of sales gained 6.5%. In monthly terms, retail sales probably rose 0.3% during October, making up for the 0.3% drop in the prior month. Annualized retail sales, without taking into account fuel sales, probably rose 4.2% in October, following another 3.1% gain in September.

This is a short-term indicator, which provides key information about consumption on a national scale. Higher retail sales suggest stronger consumer demand, confidence and economic growth, respectively. Therefore, in case the index of retail sales increased at a faster-than-projected pace, this would be pound positive. The Office for National Statistics is expected to publish the official report at 9:30 GMT.

CBI Industrial Orders

The gauge of industrial orders in the United Kingdom probably remained unchanged at a reading of -6 during the three months to November, according to expectations. This indicator reflects the net balance between companies, that registered an increase in industrial orders during the respective period of three months and those, that registered a drop. It is the oldest indicator, released from the UK private sector, to show the development tendency in countrys industrial sector. The Industrial Trends Survey by the Confederation of British Industry (CBI) provides expert qualitative opinion from senior manufacturing executives, on past and expected trends in output, exports, prices, costs, investment intentions, business confidence and capacity utilization. A level above zero suggests that volume of orders is projected to increase, while a level below zero indicates that expectations point to lower volumes. If the survey showed predominant pessimism, this would usually have a bearish effect on the sterling. The CBI will announce the results from its survey, encompassing 17 industries, at 11:00 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.8011. In case EUR/GBP manages to breach the first resistance level at 0.8035, it will probably continue up to test 0.8066. In case the second key resistance is broken, the pair will probably attempt to advance to 0.8090.

If EUR/GBP manages to breach the first key support at 0.7980, it will probably continue to slide and test 0.7956. With this second key support broken, the movement to the downside will probably continue to 0.7925.

The mid-Pivot levels for today are as follows: M1 – 0.7941, M2 – 0.7968, M3 – 0.7996, M4 – 0.8023, M5 – 0.8051, M6 – 0.8078.

In weekly terms, the central pivot point is at 0.7931. The three key resistance levels are as follows: R1 – 0.8064, R2 – 0.8135, R3 – 0.8268. The three key support levels are: S1 – 0.7860, S2 – 0.7727, S3 – 0.7656.