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    IronFX Intraday Comment | EUR/GBP | 24/11/2015

    • The dollar traded mixed against its G10 peers during the European morning Tuesday, ahead of the 2nd estimate of the US GDP for Q3. It was lower against JPY, SEK and EUR, in that order, while it was slightly higher vs GBP and CAD. The greenback was virtually unchanged NZD, AUD, CHF and NOK.

    • The German Ifo indices for November were all above expectations, helping to diminish fears about the country’s recovery path. The survey showed that German firms were less content with their current business situation and more optimistic about the future, despite the slowdown in China and other EM economies, and the Volkswagen scandal. Nonetheless, EUR/USD maintained its choppy price action established in the Asian trading session, staying slightly above the 1.0600 key support zone. We will need to see the pair breaking below that level for any hopes of a nice downward move into the end of the day.

    • The British pound came under renewed selling pressure after the Bank of England Chief Economist Andy Haldane said in the Inflation Report hearing that the balance of risks around the UK GDP growth and inflation skewed materially to the downside since the Bank’s latest Inflation Report. Furthermore, BoE Governor Mark Carney added that the economy is expected to remain in low interest rate environment for some time. As a result, we would expect GBP to remain under pressure as expectations for the first increase in Bank rate have been pushed further back.

    • EUR/GBP traded higher during the European morning Tuesday, breaking above 0.7025 (S1), the upper bound of a short-term sideways range the pair had been trading from the 17th of November. This has turned the near-term bias somewhat positive in my view and as a result, I would expect the positive move to target our resistance of 0.7070 (R1). A clear move above that barrier is likely to extend the positive move towards the next resistance obstacle of 0.7100 (R2). Our short-term momentum indicators reveal upside speed and amplify the case for further advances. The RSI rebounded from its 50 line and now points up, while the MACD, already above its trigger line has just turned positive. Switching to the daily chart, I see that the dip below the 0.7200 hurdle on the 28th of October has confirmed the negative divergence between the daily oscillators and the price action, and has also turned the longer-term outlook back negative. Therefore, I would expect the pair to continue trading lower and I would treat any short-term advances as a corrective phase.

    • Support: 0.7025 (S1), 0.6980 (S2), 0.6950 (S3)

    • Resistance: 0.7070 (R1), 0.7100 (R2), 0.7130 (R3)

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