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    IronFX Intraday Comment | EUR/GBP | 14/01/2016

    • The dollar traded mixed against its major counterparts during the European morning Thursday. It was higher against NZD, GBP and SEK in that order, while it was lower vs CHF and EUR. The greenback remained virtually unchanged against JPY, CAD, NOK and AUD.

    • The Bank of England decided to keep interest rates at 0.5% at its first meeting of the year, with Ian McCafferty again the lone dissenter. In the statement accompanying the decision, the Bank noted that inflation would take longer to rise to target levels as the risks to their November Inflation Report projections “lay a little to the downside”. On the employment sector, members noted that despite continued reductions in the rate of unemployment, pay growth remains restrained and appears to have dipped slightly in the most recent data. Overall, the statement showed that the outlook for aggregate activity is slightly weaker than in the MPC’s November central projection. The British pound gained a bit on the news as Ian McCafferty maintained his call for a rate hike and the meeting’s outcome was not as dovish as expected. Even though we could see GBP correcting a bit higher, the overall negative sentiment surrounding the “Brexit” referendum is likely to keep the pound under pressure.

    • EUR/GBP traded higher during the European morning Thursday, emerged above 0. 7555 (S1) and hit resistance near 0.7600 (R1). As long as the rate is trading above the uptrend line taken from the low of the 7th of December, I would consider the short-term outlook to stay positive and I would expect a clear break above 0.7600 (R1) to open the way for our next resistance of 0.7680 (R2). Nevertheless, taking a look at our short-term oscillators, I see signs that a downside corrective wave could be on the cards before the next positive leg. The RSI hit resistance at its 70 line and turned down, while the MACD, although above both its zero and trigger lines, shows signs that it could start topping. A clear break below the 0.7555 (S1) support level is likely to confirm the case of a pullback and could aim for the 0.7485 (S2) zone. Switching to the daily chart, I see that on the 8th of December, the rate managed to emerge above the upper bound of the sideways range the pair had been trading since the beginning of February 2015. In my opinion, this has turned the medium-term outlook somewhat positive as well.

    • Support: 0.7555 (S1), 0.7485 (S2), 0.7430 (S3)

    • Resistance: 0.7600 (R1), 0.7680 (R2), 0.7755 (R3)

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