EUR/GBP analysis for February 8, 2024
EUR/GBP showed a slight increase, correcting after a two-day drop and tested the strength of the 0.8535 level for an upward breakout. The volatility of currency pairs has significantly decreased compared to trading at the beginning of the week due to a reassessment of the prospects for a possible change in the exchange rates of monetary policy of world Central Banks. The market's attention was attracted by an interview with Fed Chairman Jerome Powell, who calls for restraint in the transition to monetary expansion, pointing to the continuing risks of rising inflation.
Data published yesterday from Germany put some pressure on the euro: industrial production fell by 1.6% in December, while a decline of 0.4% was expected. In annual terms, the indicator improved from -4.3% to -3.0%. Analysts foresee a further decline in industrial activity due to high energy prices and low demand for products. The positive trend in car manufacturing cannot fully compensate for the negative in other sectors, especially in the chemical industry.
On the other hand, data on the British housing market, presented on Wednesday, supported the pound. The Halifax house price index rose 1.3% in January, exceeding the expected level of 0.8%. Over the past three months, the annual growth rate of the index has increased from 1.8% to 2.5%. Experts note that lower mortgage interest rates, slowing inflation and a stable labor market strengthen the confidence of buyers and sellers, which may contribute to the recovery of the housing market this year. Data on the housing price index from the Royal Institute of Certified Appraisers (RICS) for January confirmed the positive trend.
EUR/GBP Technical Analysis for today
On the daily chart, the Bollinger bands decrease when the price range is reduced. The MACD indicator shows growth while maintaining a weak buy signal. Stochastic develops downward dynamics.
After a confident breakdown of the pair above 0.8546, we open long positions with a target at 0.8582. We set the stop loss at 0.8525.
Fixing the price below 0.8519 will be a signal to start selling with a target of 0.8479. Placing a stop loss at 0.8540.