Are we witnessing new Buoyancy levels between 1.15-1.20 on GBP/EUR?
The Pound has seen consistent gains against the majority of major currencies. There has been several catalysts for it’s rise. We have seen very impressive retail sales figures coming in over twice as high as expected at 0.8%. Unemployment currently sits at an 43yr low and average wage growth is very close to parity with inflation which is a true sign of a healthy economy.
Throw into the mix that a transitional deal has all been but agreed fro Brexit and we have firm justification for the Pound’s rise. The UK financial sector is looking far more comfortable with access to the single market granted until full exit from the EU.
If we look at GBP/EUR it has been stuck below the 1.15 resistance point for some considerable time. The above news helped GBP/EUR breach 1.15 fro a small window of opportunity and quickly retracted as it has done several times in the last 11 months. It took news from the European Central Bank (ECB) that a cut in Quantitative Easing (QE) could be held back for GBP/EUR to move above 1.15 and indeed stay above 1.15 for several days. QE is pumping money into an economy in order to stimulate growth, current increments are set at €30bn a month is this was to be cut the Euro would see substantial strength. Inflation has proved to be a concern and the ECB well no hold fire.
I think considering we have now seen GBP/EUR above 1.15 for several days we could be witnessing new buoyancy levels between 1.15-1.20. I would however consider a Stop/Loss order as protection in case the market falls if I was a Euro buyer.
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