EUR/GBP: early bulls caught the worm in holiday markets

• EUR/GBP stuck below the 200-hr SMA in holiday thin markets.
• EUR/GBP supported on positive European morning.

EUR/GBP has sat still around the 200-hr SMA at 0.8907 and is currently, EUR/GBP is trading at 0.8906, up 0.38% on the day, having posted a daily high at 0.8914 and low at 0.8868. After EUR/GBP ended NY yesterday at 0.8835 at 0.19%, with the upbeat UK data may allow BoE to hike aggressively, the euro played catch up on the back of the recent fundamental releases that were offering support to the euro.

European data supportive

We had the preliminary PMI’s for France, Germany, and the euro area has been positive. Also, minutes of the last ECB meeting showed broad support for taper decision but there was controversy over whether or not QE extension should be open-ended. 

"All in all, the minutes show that there was broad agreement on the October decision to reduce the monthly QE purchases, starting January 2018. However, further down the road, i.e. beyond September 2018, new disagreements could emerge. In our view, the ECB will do another lower for longer after September 2018. But this discussion is not for now," explained analysts at ING.

ECB: Policy set until Sep 2018 - Westpac

EUR/GBP levels

Analysts at Commerzbank explained that EUR/GBP remains on the defensive following its recent failure at the 0.9034 12th October 2017 high. "The market is capable of sliding towards the bottom of the range again. Dips lower should find initial support .8790/83 ahead of the major support band, namely the September low at 0.8746 and the 55-week ma at 0.8721. Above 0.9034 would target .9093 then 0.9187. Immediate support is offered by the previous downtrend at .8870. Where are we wrong? Below 0.8720 would target the 0.8530/78.6% retracement of the move seen this year. Near-term rallies should find decent resistance at 0.8840/80 (38.2% and 50% retracements of last leg down)."