Forex Market: EUR/GBP daily trading forecast

Yesterday’s trade saw EUR/GBP within the range of 0.7747-0.7850. The pair closed at 0.7825, gaining 0.12% on a daily basis.

At 7:13 GMT today EUR/GBP was up 0.17% for the day to trade at 0.7838. The pair touched a daily high at 0.7840 at 7:05 GMT.

Fundamentals

Euro zone

French Consumer Confidence

Confidence among consumers in France probably improved, with the respective index coming in at a reading of 88.0 in December, according to the median forecast by experts, from 87.0 in the preceding month. If confirmed, this would be the highest index reading since June 2012, when the gauge was reported at 89.0.

The index of consumer confidence is based on a survey, encompassing about 2 000 households. Respondents give their opinion regarding past and future economic situation in France, past and future personal financial situation, unemployment, intention to make major purchases, current savings capacity and expected savings capacity.

The indicator is calculated using factor analysis technique. The index is then calculated in a way to measure the current confidence compared to the historic index values during the period 1987-2011. If the gauge shows a reading over 110, this suggests that optimism is higher than normal. If the index shows a reading under 90, this implies that pessimism is higher than normal. Readings of 100.0 signify neutrality.

Improving confidence is related with greater willingness to spend, therefore, higher than projected values may provide a limited support to the euro. The National Institute of Statistics and Economic Studies (INSEE) is to publish the official data at 7:45 GMT.

Services PMIs

Services sector in Spain probably registered higher activity in December, with the respective Purchasing Managers Index climbing to 52.9, according to expectations, from 52.7 in November. The latter has been the lowest PMI value since November 2013, when the indicator was reported at 51.5. The official value for December is due out at 8:15 GMT.

Activity in Italys sector of services probably remained little changed in December, with the corresponding PMI coming in at a reading of 51.7, as expected by experts, from 51.8 in the prior month. The latter has been the highest PMI value since July, when the index stood at 52.8. Markit Economics is expected to release the official data at 8:45 GMT.

Frances final services PMI probably remained in the zone of contraction for a fourth consecutive month during December, while confirming the preliminary PMI reading of 49.8, which was reported on December 16th. In November the final services PMI was estimated at 47.9, or the lowest since February, when the indicator came in at 47.2. The official reading is due out at 8:50 GMT.

The final reading of German services PMI probably confirmed the preliminary value for December, with the index coming in at 51.4, according to market expectations. If confirmed, this would be the lowest PMI reading since July 2013, when the gauge was reported at 51.3. In November the final services PMI was registered at 52.1. The index is based on data collected from a representative panel of more than 500 companies, operating in Germanys services sector, and gauges variables such as sales, employment, inventories and prices. Markit will release the official reading at 8:55 GMT.

The final services PMI in the Euro area probably also confirmed the preliminary value for December, with the index remaining at 51.9. In November the index came in at 51.1, according to final data, or the lowest level since December 2013, when it was registered at 51.0. The Purchasing Managers Index is based on a monthly survey, encompassing a sample of approximately 2 000 business entities, which represents private sector conditions in terms of new orders, output, employment, prices etc. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. Readings above the key level of 50.0 indicate optimism (increasing activity). Higher-than-expected values of any of the above mentioned PMIs would support demand for the common currency. The official reading is scheduled to be released at 9:00 GMT.

United Kingdom

Bank of Englands report on lending conditions

At 9:30 GMT the Bank of England (BoE) will publish its report on lending conditions in the United Kingdom during the three months to December. It is based on a survey of banking and non-banking institutions, which provide information regarding secured and not secured loans to households, small and medium enterprises and corporations outside financial sector. Respondents in the survey are asked about their opinion on conditions during both the past three and the upcoming three months.

Activity in services sector

Activity in United Kingdom’s sector of services probably remained almost without change in December, with the corresponding PMI coming in at 58.5, down from 58.6 in the prior month. The latter has been the highest level since September, when the PMI stood at 58.7. 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 slowdown in the index would certainly reduce the appeal of the pound. The Chartered Institute of Purchasing and Supply (CIPS) is to announce the official reading at 9:30 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7807. In case EUR/GBP manages to breach the first resistance level at 0.7868, it will probably continue up to test 0.7910. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7971.

If EUR/GBP manages to breach the first key support at 0.7765, it will probably continue to slide and test 0.7704. With this second key support broken, the movement to the downside will probably continue to 0.7662.

The mid-Pivot levels for today are as follows: M1 – 0.7683, M2 – 0.7735, M3 – 0.7786, M4 – 0.7838, M5 – 0.7889, M6 – 0.7941.

In weekly terms, the central pivot point is at 0.7810. The three key resistance levels are as follows: R1 – 0.7877, R2 – 0.7924, R3 – 0.7991. The three key support levels are: S1 – 0.7763, S2 – 0.7696, S3 – 0.7649.