EUR/GBP bears are making another attempt at breaking major support this week. Will they get the job done with potential catalysts coming soon from the U.K., or is this another short-term opportunity for the bulls?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at the short-term uptrend in GBP/CHF, so be sure to check that out to see if there is still a potential play!
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Upcoming Potential Catalysts on the Economic Calendar
New Zealand Food Prices at 9:45 pm GMT
Australia Consumer Sentiment at 11:30 pm GMT
Japan Core Machinery Orders at 11:50 pm GMT
New Zealand Prelim Business Confidence at 12:00 am GMT (Oct. 13)
China Trade Balance at 3:00 am GMT (Oct. 13)
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U.K. GDP, Trade Balance, Manufacturing Production at 6:00 am GMT (Oct. 13)
Euro area Industrial Production at 9:00 am GMT (Oct. 13)
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What to Watch: EUR/GBP
On the one hour of EUR/GBP above, we’ve got textbook range patterns in the works over the last week, but with bears mainly control on the higher time frames. EUR/GBP is actually testing a major area of interest at the moment as it is both sustaining trade below 0.8500 major psychological level, and slowly breaking the September swing lows that held off the bears before EUR/GBP bounced higher later in the month. The question now is whether or not a major support break is just ahead, or will the bulls come back to bring in the counter-trend bounce?
Well, that could depend on the upcoming from the U.K. on the forex economic calendar, which does include the latest GDP update, typically a short-term volatility boost for the British pound. We’ve also got European industrial production data and German inflation data during the London session as well; while not usual market movers we should keep’em in mind just in case we get huge surprises, especially in inflation data.
For us, with the price trend lower on EUR/GBP and broad speculation priced in that current conditions in the U.K. warrant a rate hike, we’re looking for a break of the support area to potentially short IF Sterling bulls come strong after a better-than-expected GDP release. Those conditions makes sense to draw in more Sterling bulls, but keep in mind that it’s not a guarantee as some traders may take Sterling long profits on this release.
Also, if EUR/GBP bounces up to the falling ‘highs’ pattern before the U.K. and Euro area updates, then we’ll be watching for bearish reversal patterns for a potential short position, again if we see much better-than-expected data from the U.K. and if broad risk sentiment is leaning positive on the session.