On Thursday, the EUR/GBP cross rate ceded some minor ground that however in no way changed the picture. The move might also be considered as a ‘correction’ on the EUR/GBP rebound over the previous days.
The UK retails sales for November were perfectly in line with expectations (M/M), but an upward revision of previous months lifted the Y/Y figures. EUR/GBP lost a few ticks after the release. During the US trading hours, the pair initially settled in narrow range at around 0.8480.
Later on, it ceded some ground in step with EUR/USD after the publication of the Philly Fed. However, contrary to EUR/USD, the cross sidn’t rebound, leaving the cross at 0.8472 in the close, compared to 0.8500 on Wednesday evening. In Asian trading, the pair climbed again higher and seemed on its way to retest the key resistance area at 0.8548/98.
The pair touched 0.8529 when Moody’s announced it cut the rating of Ireland by 5 notches to Baa1. It pushes the pair slightly lower, but just as earlier this week in the case of the rating action versus Spain (on negative outlook), we expect only a temporary negative euro reaction. We think such action is largely discounted.
Today, economic calendar in the UK is empty. So, EUR/GBP trading should be driven by global factors, particular the market reaction to the EU summits, and/or technical considerations.
Content provided by: KBC Bank