MO EURGBP – 11.12.18
37862
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MO EURGBP – 11.12.18

Long Term Overview:

Economic Analysis

As of writing recent Brexit negotiations are looking favourably for the Pound, after months of the EU listening to the U.K. warning about the risks posed by a no-deal Brexit, the European Union financial regulators and OECD have clarified the risk to Euro Zone financial stability and as a result; negotiators are now stepping up plans to avert a no deal situation.

 

In recent weeks the market has seen Euro Zone bond yields reassert themselves as a major influencing factor in terms of EUR stability. With ongoing Italian budget negotiations likely to continue to destabilise the EUR in the near term.

 

The combination of accurate Brexit economic impact data and on-going internal EU concerns, alongside the ongoing weak but relatively stable position of the UK economy suggests there remains a lot of indecision as to how Brexit will affect the EU and the U.K., however forecast predict that the Euro will be less negatively affected than the Pound under a no deal environment. However, should a deal be reached the opposite is expected to be the case.

 

In the near to medium term continued weakness and instability within the EU and Euro Zone Economy is likely to remain a key suppressing factor for the EUR whilst in terms of the GBP markets await the outcome of the next EU General Affairs Council on the 12th of November. As a result, the EURGBP may see further meaningful instability throughout November.

Long Term Analysis

The Long-Term market position of the EURGBP is heavily reliant on the outcome of continuing Brexit negotiations, however Euro/Pound bias is mixed on the Monthly charts shown and a symmetrical triangle formation is apparent on the monthly chart.

 

Price has broken outside of its symmetrical triangle formation to the downside and is beginning to increase in bearish volume on the Monthly time frames charts. As a result, EURGBP may weaken to the Monthly 50EMA near the 0.8475 area, within the next financial quarter. However, do be cautious of trading the EURGBP in the Medium-Long Term as markets are still very unsure of how Brexit will affect both economies.

 

 

Decision Point: Close below previous lows nearing the 0.8700 area

Long Term Trend: mixed

Channel Range: N/A

Possible Bias: Short

Medium Term Analysis

The Medium-Term bias for the EURGBP is mixed and is heavily reliant on Brexit related issues alongside the ongoing Italian budget negotiations. Price has broken outside of its symmetrical triangle formation to the downside after gapping down from the previous week by 40 pips. As well as bearish volume is beginning to increase on all time frame charts presented. Because of these factors, EURGBP may weaken to the previous lows near the 0.8600 area, within the next couple of weeks. However, once again caution on this instrument may be advisable as markets are still very unsure of how Brexit will affect both economies.

 

 

Decision Point: Close below previous low nearing the 0.87230 area

Long Term Trend: Mixed

Channel Range: N/A

Possible Bias: Short