Yesterday, the EUR/GBP pair started the day heading south. It fell to the 0.8781 level. It then rose to the 0.8812 level. It ended the day higher at the 0.8829 level.
This interesting move was attributed to several things. First, the United Kingdom released mixed employment data yesterday. The jobless rate of 4.3% – which remains at a 42-year low – missed analyst expectations of 4.2%.
The claimant count increased by 5,900 missing the analysts’ expectations of 3,200 after a 6,500 in the previous month.
The only silver lining in the data released was the wages which increased by 2.3% (excluding bonuses) compared to the analysts’ expectation of 2.2%.
Secondly, traders are looking forward to the ECB and BoE interest rate decision. The two central banks are expected to leave rates steady at 0% and 0.5%. The interest rate decisions could not move the market much as traders wait for the statement from the two central bankers.
The chart also did an interesting thing yesterday. It traded lower than the 200 EMA. In the daily chart below, I have showed the few times when the chart has traded below this EMA.
As shown in this chart, the pair tends to move up when it trades above this MA.
Today, the pair will be a major focus among traders mainly because of the expected central banks decisions and the expected data.
In the morning, we will get the German PMI data. Traders expect the manufacturing activity of 62.2 down from the previously reported data of 62.5. The services and composite PMI will be unchanged. Later, the UK will release the MoM retail sales where traders expect a growth of 0.4%.
As shown in the hourly chart below, the pair has traded in a narrow range of 0.8689 and 0.8864 for several weeks now. So, the projections from the ECB and BoE will be crucial. Traders should watch out for the two levels for support and resistance.
If the chart crosses the 0.8867 level, the next target for traders should be the resistance point at 0.8970 which is shown in the 4-hour chart below.
On the other hand, if the chart falls, traders should watch for the 0.8689 level which is the 5-month low.