Fundamental outlook

In this edition of the JRC Capital Management Weekly Outlook we analyze the EURGBP exchange rate.

The Brexit is coming closer, but there are still many unsolved issues. Towards the end of last year, the British Prime Minister Theresa May had to face a non-confidence, which she was able to win. On the 15th of January, the House of Commons will have the final vote over the with the EU negotiated agreement. However, the signs are not good for May – critical voices are increasing. There have been several warning that a No-Deal Brexit could lead to chaos and speculations over a postponement of the Brexit arose lately. The Situation remains highly uncertain and any news can have a big impact on the EURGBP.

Relevant economic data that could cause volatility are quite rare this week, which is in regard of the political situation relatively positive. The highlights of the week are the British consumer price index, which will be published on Wednesday, and the Bank of England report on the Banks with the European consumer price index coming on Thursday.

Technical analysis

Trend indicationResistance / Support
Short Term (daily)neutralResistance 10.9060
Medium Term (weekly)bullishResistance 20.9100
Long Term (monthly)neutralSupport 10.8940
Support 20.8800
 Brexit vote in the Commons - EURGBP Chart

Since December, the EUGBP is moving in a narrow range of a little bit more than 100 pips between 0.8940 and 0.9060. Apart from a few times, the course was not able to break through these level. It is highly unlikely that a clear, long-term trend will emerge in the EURGBP as long as the political situation remains that uncertain. Consequently, the aforementioned level will be the first important resistance and support levels to watch. Currently, the price is quoted at 0.8965 at the lower end of the sideways range. If the EURGBP is able to break below the support level, we can locate another important support area at 0.8800. In case of rising prices and a break out over the upper end of the range, the next important resistance is situated at 0.9100.