GBP/USD and EUR/USD come off their recent highs while EUR/GBP consolidates
Outlook on EUR/USD, EUR/GBP and GBP/USD as they consolidate post European PMI data.
EUR/USD consolidates below parity
EUR/USD’s near 5% rally from its $0.9536 fresh 20-year September low faltered just below parity amid weaker than expected Eurozone purchasing managers index (PMI) data which continues to point towards a possible recession.
The cross thus slid back to its two-week support line and may soon revisit the $0.9855 late September high. Further down minor support can be found around the $0.98 mark and also at the 3 October low at $0.9753.
In case of the minor support line holding, parity may be revisited. Slightly above it the 55-day simple moving average (SMA) and the February-to-October downtrend line can be spotted at $1.0025 to $1.0038 and are likely to cap the upside this week.
EUR/GBP consolidates post weak Eurozone PMI data
EUR/GBP has been trading in a less volatile fashion than last week when it shot up to its £0.9283 two-year high on the back of the UK’s mini budget which introduced the biggest tax cuts in 50 years.
Following the government’s partial U-turn on Monday, EUR/GBP slid to this week’s low at £0.8649 before consolidating amid weak Eurozone PMI data and while awaiting UK construction PMI data.
Further sideways trading seems to be at hand with minor resistance sitting at the £0.8787 mid-September high. If overcome, the 26 and 28 September lows at £0.8853 would be next in line. Below the recent low at £0.8649 lies the mid-September low at £0.8626 and the 55-day SMA and early September low at £0.8587 to £0.8567.
GBP/USD consolidates below this week’s high made close to $1.15
GBP/USD’s 11% rally from its all-time low at $1.035 following the UK governments largest, by some seen as unfunded, tax cuts in 50 years, seems to have stalled marginally below the $1.15 mark.
Monday morning’s U-turn on the abolishment of the UK higher earners 45p tax rate cuts, only saving of around £2 billion out of a £45 billion fiscal loosening programme, and Wednesday’s decision by the Chancellor of the Exchequer Kwasi Kwarteng to freeze tax thresholds, which in three years’ time will deliver an extra £41 billion amid high inflation and rising wages, have not helped the pound which has so far slid back to $1.1228.
GBP/USD now trades below minor technical resistance seen between the 7 and 16 September lows at $1.1351 to $1.1406 while immediate support below $1.1228 can be found along the two-week support line at $1.1178.
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