EUR/GBP, GBP/USD and EUR/USD await new UK chancellor’s statement
Fundamental commentary and technical analysis on EUR/USD, GBP/USD and EUR/GBP.
EUR/USD consolidates around 97 cents ahead of German ZEW economic sentiment
EUR/USD is seen consolidating around the 97 cent mark, having last week shot up from its $0.9632 low to its $0.9808 high amid stronger-than-expected US consumer price index (CPI) data. The currency pair awaits the October ZEW economic sentiment data in Germany on Tuesday which is expected to come in at -61.2 versus -60.7 in the previous month.
Minor support comes in around the 97 cents zone and also at the one-month support line at $0.9648. Below it, lies last week’s low at $0.9632. A rise above last week’s high at $0.9808 would put the $0.9865 to $0.9946 August-to-mid-September lows back on the plate. Key resistance remains to be seen between the 55-day simple moving average (SMA), the February-to-October downtrend line, early-October high between $0.9963 and parity.
EUR/GBP consolidates ahead of new UK chancellor’s statement
EUR/GBPcontinues to trade along the 55-day SMA at £0.8649 as traders await the new UK chancellor of the exchequer, Jeremy Hunt’s, statement about his fiscal policy. It is widely expected that a number of tax rises will be brought forward and planned tax cuts pushed back as he looks to shore up the UK's fiscal position which led to buying in the pound sterling.
Thus, last week’s low at £0.861 may be revisited, a slip through which would engage the early-September low at £0.8567. Further sideways trading with a slight bearish slant seems to be at hand with minor resistance sitting between the one-month downtrend line and the mid-September high at £0.8764 to £0.8787. If overcome, the 26 and 28 September lows at £0.8853 would be next in line.
GBP/USD gains ground ahead of Jeremy Hunt statement
Last week, GBP/USD rallied back to its August-to-October downtrend line at $1.138 which capped before the cross came off again.
The Friday lunchtime news that the new UK prime minister - Liz Truss - had sacked her chancellor of the exchequer, Kwasi Kwarteng, after only 39 days in office, only the second shortest stint since Ian MacLeod in 1970 when he died only a month after taking office, and replaced him with the experienced former culture, health and foreign secretary Jeremy Hunt led to a slip in the pound sterling. Perhaps the reason for the initial GBP/USD slide was that Mr Hunt supported the prime minister’s rival Rishi Sunak in the Tory leadership battle.
This week has kicked off with a stronger GBP/USD exchange rate, however, since the market expects several promised tax cuts to be rolled back or delayed whereas some tax rises will be brought forward as the new chancellor looks to calm financial markets and shore up the UK’s fiscal position. Thus, the three-month downtrend line at $1.1336 may be revisited, but only a rise above last week’s high at $1.138 would put the early-October peak at $1.1495 back on the map. Slips should find initial support around the 11 October high at $1,118 and then along the one-month support line at $1.1074.
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