Forex Market: EUR/GBP daily outlook

During yesterday’s trading session EUR/GBP traded within the range of 0.8271-0.8309 and closed at 0.8280.

At 6:16 GMT today EUR/GBP was losing 0.21% for the day to trade at 0.8265. The pair breached the first key support and touched a daily low at 0.8261 at 2:05 GMT.

Fundamental view

Euro zone

Services Purchasing Managers Index (PMI) for Spain probably dropped to a reading of 53.5 in March from 53.7 in February. Markit Economics will release the official reading at 8:15 GMT.

The same indicator for Italy probably fell to 52.0 last month from 52.9 in February. The official result is expected at 8:45 GMT.

The final reading of Frances Services PMI in March probably matched the preliminary value at 51.4, which was released on March 24th. Readings above the key level of 50.0 are indicative of expansion in activity. Higher than expected values would provide support to the euro. Markit is to report the official value at 8:50 GMT.

The final reading of Germanys Services PMI in March probably also met the preliminary value at 54.0. The official reading is to be released at 8:55 GMT.

The final reading of Euro zones Services PMI probably coincided with the preliminary value at 52.4 last month. In case market expectations are exceeded, this will boost demand for the single currency. Markit Economics will report the official value at 9:00 GMT.

Annualized retail sales in the Euro region as a whole probably rose 0.8% in February, according to the median forecast of experts, after in January sales climbed 1.3%. In monthly terms, retail sales probably dropped 0.6% during February. 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.

At 12:45 GMT the European Central Bank will announce its decision on borrowing costs. The benchmark interest rate will probably be left unchanged at 0.25% at the policy meeting, according to the median estimate by experts. A cut in rates further would have a bearish effect on the euro.

The decision on policy will be followed by a press conference with ECB President Mario Draghi, scheduled at 13:30 GMT. Market volatility during this event is usually high.

United Kingdom

Activity in United Kingdoms sector of services probably was almost unchanged in March, with the corresponding PMI coming in at 58.1, down from 58.2 in February. 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 9:30 GMT.

Also at 9:30 GMT Bank of England (BoE) will publish its report on lending conditions in the United Kingdom during the three months through March. 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 past three and the upcoming three months.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/GBP manages to breach the first resistance level at 0.8302, it will probably continue up to test 0.8325. In case the second key resistance is broken, the pair will probably attempt to advance to 0.8340.

If EUR/GBP manages to breach the first key support at 0.8264, it will probably continue to slide and test 0.8249. With this second key support broken, the movement to the downside will probably continue to 0.8226.