Forex: EUR/GBP: Merkel inks coalition government into being

on Nov 27, 2013
Updated: Oct 21, 2019
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_iNVEZZ.com: Wednesday, November 27th:_ The EUR/GBP yesterday opened at 0.8367 and closed at 0.8368, scoring a 0.01 percent gain intraday and registering its third consecutive day of gains. The pair traded within the range 0.8359 to 0.8389 – the highest point since 20 November.

Yesterday Bank of England governor Mark Carney told the Commons Treasury Committee that there was still significant weakness in the UK economy though the robust recovery is seeing this fragility gradually subside. He said that although the seven percent unemployment target is a prerequisite for tightening, its achievement did not portend an immediate increase in interest rates.

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Since yesterday the pair has been finding support at the 200-hour simple moving average, currently positioned at 0.8364.
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So far today the pair has been trading between 0.8382 and 0.8367, with the quote currently at 0.8370.
German Chancellor Angela Merkel has agreed with the Social Democrats on the establishment of a coalition government, it’s been announced today. The deal provides for increases in the minimum wage, pensions and infrastructure spending, without any tax hikes.

The coalition agreement gives the green light to Merkel’s third term in charge of Europe’s largest economy and comes almost two months after elections which saw Merkel’s Christian Social Union emerge as the leading party in the Bundestag. Social Democrat leader Sigmar Gabriel and the president of the Christian Social Union, Horst Seehofer, will give a press conference at 11.00 UTC today.

Gfk German Consumer Confidence Climate for November showed a rise to 7.4 points from 7.1, revised up from 7.0. Analysts had expected a reading of 7.1 points. In contrast, French Consumer Confidence dropped to 84 points in November from 85, while analysts had been expecting no change.
Spanish Retail Sales y/y fell by 0.5 percent in October, beating forecasts for a 1.6 percent decline.

In the UK, the Second Estimate of GDP q/q for the third quarter matched expectations for a rise of 0.8 percent. The month-on-month data showed a 1.5 percent rise, also in line with expectations.
Preliminary Business Investment for Q3 q/q grew by 1.4 percent, missing forecasts of a 2.3 percent increase.
According to Nordea Markets research, the euro “has gained versus the pound [in] seven out of the last 10 years in November”.
In the view of UBS, the EUR/GBP is bearish while the 0.8415 resistance holds and there is the prospect of a testing of the major support area at 0.8301 and 0.8285.
Today’s resistance levels: 0.8385, 0.8400 and 0.8415.
Today’s support levels: 0.8370, 0.8360 and 0.8345.
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