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– GBP / EUR is bullish continuation

– Higher goals are confirmed by a break above the range

– Pay data is the most important economic data for this week

The pound-to-euro rate opens the new week at 1.1592, after rising 0.15% last week. Chart studies show that the pair is pausing at the top of a long-term range, with bullish price patterns indicating a trend towards more upward movement in the future.

GBP to EUR four hours "width =" 750

The 4-hour chart – to determine the short-term outlook, ie next week – shows how the pair is at the top of a long-term range that could act as a "glass ceiling" for further upward movement.

At the same time, however, a possible bullish stopping pattern is formed, which is referred to as a "pennant" and could suggest a significant upside potential in the event of a higher outbreak.

If the exchange rate can successfully rise above the pennant's peak, defined as the October 17 high of 1.1661, this will likely confirm a continuation that is initially 1.1800 and then perhaps 1.1915 in the short term.

Although momentum is slowing (circling) and suggesting the risk of a bearish collapse, this is not a cause for concern and would only cause concern if the pair breaks below the lows of 1.1525. In this case, a drop to 1.1350 could be possible.

The top of the range is a hard upper limit on the exchange rate, so our optimistic forecast depends on a breakthrough to new highs.

In view of the general upward trend, however, a continuation is only slightly favored.

The daily chart shows the pennant pattern more clearly and shows the maximum price target at 1.2000 – 1.2200.

Daily GBPEUR chart "width =" 750

Pennant patterns take their name from the triangular flags that used to flow from medieval castles.

The triangular pennant form precedes a steep rally called the "pole" – like a flagpole. It is used as a measure because the following rally is usually either 61.8% of the length of the pole or the same length (100%).

In the example above, this gives a target at 1.1915 and 1.2200, respectively.

The daily chart shows that it may have formed another pattern called the "Measured Move" or ABCD pattern, which is a higher three-wave zig-zag pattern.

The measured motions are useful for forecast purposes because the first (A-B) and third (C-D) waves are often the same length. The length of A-B may therefore be helpful in predicting the length of C-D.

In the case of GBP / EUR, such a calculation suggests an end point for & # 39; D & # 39; and therefore a target between 1.1775 and 1.1800 ago.

A clear breakthrough over the highest levels of bandwidth, confirmed by a move above 1.1661, would be a necessary condition for achieving the goal.

One or both patterns may be valid and not mutually exclusive.

The daily chart analyzes the medium-term trend, which is the next week until the next month of price movement.

The weekly chart shows that the pair is currently trading in hard resistance between the 200-week moving average (MA) and long-term highs.

Weekly GBPEUR "width =" 750

The combination of both levels is quite strong and only a clear break above the highs of 1.1661 would confirm a continuation of the uptrend.

Such a move could trigger an expansion of the bull's eye to a long-term target of perhaps 1.2200, as suggested by the bull's pennant on the daily chart.

The 1.20 represents a long-term equilibrium point for the exchange rate and profits over it may be more difficult to achieve.

At this level, there is an increased risk of pullback and long-term consolidation, defined as the next few months, the timeframe analyzed on the weekly chart.

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GBP this week: Surveys and important data

UK flag

The pound has turned sideways against the euro, a clear reflection of a market paralyzed by political uncertainty.

We believe Sterling reflects the conservative's 10-point lead over Labor in the polls. The assumption is that the benefit will be sufficient to form a majority government that will speedily implement Brexit in the new year under the terms of the EU-UK Brexit agreement that was concluded the year before.

We would expect sterling to break out of recent areas when polls indicate that the conservative advantage has grown or shrunk. The general rule of thumb is that should the pound shrink, it will come under pressure. Should it grow, then the pound can find an upward impulse.

Away from politics, we focus on key economic data: Q3 GDP will be released on Monday, labor market data on Tuesday, inflation figures on Wednesday and retail sales on Friday

"We have a busy week ahead of the release of economic data, which will be interesting given the Bank of England's reluctant message last week," said Aila Mihr, senior analyst Danske Bankand added:

"Growth is still sluggish given weak PMIs, but stocks may have made a positive contribution before the end of the Brexit deadline of October 31. On Tuesday, the September job report will be released, the last of which will be interesting Employment declines have been reported, with CPI inflation expected for October and retail sales in October for Thursday on Wednesday. "

For the third quarter, a GDP of 0.4% is forecasted when it is released at 09:30 GMT. This is an improvement from the previous quarter's value of -0.2%.

Average earnings data for Tuesday (with bonus) are expected to be 3.8% if released at 09:30 GMT, unchanged from the previous month. A strike would be positive for Sterling, a failure would be negative.

The change in employment from three months to three months is expected to be -90,000.

For Wednesday, a headline inflation rate of 1.6% over October is forecast for October, which is a slight 1.7% decline from September.

We would expect a currency reaction to the above data to be short-lived as the market remains focused on parliamentary elections.

EUR is facing an important week

EU flag

"In the euro area, we have an important week ahead of us," Mihr quotes the Spanish election results, President Trump's decision on EU tariffs and production figures in the eurozone.

Spain voted on Sunday in its fourth election in four years, when Prime Minister Sanchez failed to reach an agreement with the leftist Podemos after the last elections in April.

"Sanchez now hopes to receive enough support for the government, but recent polls show that support for the PSOE is declining, and again, no party or bloc is likely to get an absolute majority in the heavily fragmented parliament," says Mihr. "For the markets, a leftist government supported by nationalist parties would be slightly market-unfriendly in the near future, while a PSOE minority government with legal containment should be market-friendly in the near future due to the possibility of market-oriented reforms."

On Tuesday, the German ZEW Current Conditions data for November and the economic climate will be published.

The German economy is struggling and markets will be watching these forward-looking indicators for signs that the European target economy is nearing completion.

The number of current conditions is expected to be displayed at -21 o'clock, while the number of currency conditions is expected to be displayed at -13 o'clock.

On Wednesday, US President Trump is expected to announce whether he will impose additional tariffs on cars imported from the EU.

"Additional tariffs would be the last nail in the casket for the already weak sector of manufacturing (and the car sector) in the euro area, as signs of stabilization are becoming more prevalent, but they will also be a heavy blow to US consumers, said President Trump will definitely avoid participating in the 2020 presidential election, "says Mihr.

The decision to transfer tariffs to the EU would prove to be a negative surprise, as the market consensus suggests that Trump will not get ahead with punitive tariffs.

In fact, Trade Minister Wilbur Ross recently said that the tariffs may be off the table for the time being after "good talks" with the automakers about possible production relocations. Nevertheless, investors should follow the announcement very closely.

Production figures for the eurozone for the industry will be released on Wednesday, September at 10:00 GMT. The market consensus expects a -0.3% month-on-month reading to be released in September.

"The question is whether the stabilization of recent manufacturing PMIs will translate into production figures, and we expect the numbers to confirm that the manufacturing sector was in recession in the third quarter," says Mihr.

Banner "width =" 100 "height =" 86Time to move your money? Get 3-5% more currency than your bank would offer by using the services of a specialist forex specialist. A payment provider can provide you with an exchange rate that is closer to the real market price than your bank, saving you significant amounts of currency. Find out more here.

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