Yesterday’s wide spread up candle for the euros to pounds currency pair, confirmed once again that bearish tone is changing as we gradually inch our way ever higher towards the resistance levels lying ahead. Indeed the low of yesterday found good support from the intertwined 9 and 14 day moving averages, and despite these indicators carrying less weight at present, nevertheless this is a positive signal. However, before we rush into any trend trades higher, the move has been laboured to say the least, with little in the way of momentum and the move could best be described as inching higher. With no momentum this move could stall at any time, and for a sustained break, we need to see a breach and hold above the first level of resistance at the 0.8750 price handle, followed by penetration of the 0.9000 level as a secondary target. If both these objectives are achieved and with support from the three moving averages, then we could see a sustained move higher to retest the 0.93 region and beyond. It is also interesting to note that the 40 day moving average has now crossed below both the 9 and 14 day indicators, adding some weight to this analysis.
The fundamental news in Europe today has been mixed, with French consumer spending coming in better than expected at 1.4% vs 0.4%, whilst Industrial New Orders fell well below analysts expectations at -0.2% vs 1.9% For UK sterling the main item of news was the CBI Industrial Order Expectations which like Europe fell short of the forecast figure at -59 vs -46, and worse than last month. So hardly a bright picture for either currency!
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