EURGBP: Sterling Stays Stronger after Weak Factory Data

10 / 07 / 2018
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The pound was trading elevated on Tuesday and the EURGBP cross was down 0.25% during the London session, hovering around 0.8845 and slightly above the 200 day moving average.

The UK manufacturing production for May ticked higher from 0.9% to 1.1% year-on-year, although analysts had expected 1.9%. The monthly change also missed estimates, but improved from -1.3% to 0.4%. Industrial production slowed by half to 0.8% from 1.6% (the yearly basis) and the month-on-month change accelerated somewhat from -1.0% to -0.4%.

Moreover, the deficit of trade balance narrowed marginally to 2.79 billion GBP, up from a deficit of 3.09 billion GBP previously.

Later in the day, the important German ZEW surveys are due and all three indicators are seen weakening, which could send the euro slightly lower.

The EURGBP cross stalled yesterday at the strong bearish trend line near 0.8880, where the key resistance is seen. If broken, the current downward trend could be broken, with the next target at March’s highs at 0.8950.

On the downside, the support is at 0.8835 and afterward at the 200 day moving average a couple of pips lower.

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