The EURGBP eased on losses as the Sterling fell as the services PMI data came in weaker than expected. The services PMI, conducted by Markit Economics and the Chartered Institute of Purchasing and Supply, slowed to 58.8 in December from 60 in the previous month. The Sterling is also seeing profit taking, while being extra sensitive to data, after gaining over seven percent in the last six months alone.
Even given the Sterling’s fall, the euro still remains weak after refusing to decline through rate cuts, poor fundamentals and central bank language. Over the long-term, the pound will likely win the battle over the euro through bettering fundamentals. The technicals also show EURGBP continuing the downtrend.
The daily chart shows the overall downward trend, while price action was able to stabilize near minor support. The upside potential of EURGBP is riddled with price action resistance which would make movement upwards choppy. Nearest upside targets also represent resistance at .8331, .8360 and potentially .8390. However, a downward continuation is likely if the Sterling overtakes the euro at .8268. If so, look for a downside target at .8205.
The weekly chart also supports the downward move, but price action is near key support.The three-year weekly chart shows the pair found support at .8256. This support also lies on the 50 percent retracement from the three-year high-to-low. Resistance will likely be found at the 200 EMA, and this corresponds with the secondary daily resistance at .8360. EURGBP can retest the 50 percent Fib. level, and a close blow would signal movement down to .8155/60 before establishing support.