xysoom
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| Posted: 01 July 2020 at 21:54 | IP Logged
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EUR/GBP Chart Setup Ahead of ECB Minutes, UK PMI Data
Market sentiment appeared to have a risk-off tilt as the
anti-risk US Dollar and Japanese Yen rose at the expense
of the cycle-sensitive Australian Dollar. US equity
futures pointed in the same downward direction while
Asia-Pacific stocks traded mixed. RBA Governor Philip
Lowe gave a speech, warning that monetary policy has its
limits and that fiscal measures are crucial in combatting
the coronavirus. Read the full report here.To get more
news about
W
ikiFX, you can visit wikifx news official website.
ĦĦĦĦEuro Outlook Ahead of ECB Minutes
ĦĦĦĦIt is difficult to say how the Euro will react to the
publication of ECB meeting minutes considering most of
the attention now appears to be focused on the central
banks tension with the German high court. It recently
issued a ruling that deemed the 2015 asset purchases
program and the subsequent growth of the ECB balance
sheet to its current size illegal, giving the central
bank three months to explain their policies.
ĦĦĦĦThe court said that unless such an explanation can be
made, the Bundesbank will not participate in the
quantitative easing program. ECB President Christine
Lagarde defended the central banks decision and affirmed
her support of the Pandemic Emergency Purchase Program
(PEPP). This extraordinary measure by the ECB entails
purchasing 750 billion euros of debt this year in order
to contain the financial fallout from Covid-19.
ĦĦĦĦIf the underlying tone of the minutes strikes an
unexpectedly gloomy tone, it could lead to heightened
liquidation pressure in the Euro. Investors will be
eagerly scanning the pages to find a more detailed
outlook on the ECBs position for its PEPP program. In a
recent interview, Mrs. Lagarde made it clear that
monetary authorities Ħ°will not hesitate to adjust the
size, duration and composition of the PEPP to the extent
necessaryĦħ.
ĦĦĦĦBritish Pound Braces for UK PMI Data
ĦĦĦĦThe British Pound may decline following the
publication of flash PMI data for May. Manufacturing,
services and the composite reading are expected to print
at 37.2, 24.0 and 25.7 print, respectively. While this is
far below the neutral 50.00 figure, it is an improvement
from the prior month.
ĦĦĦĦWorse-than-expected readings could inspire further
rate cut bets from the Bank of England as officials
contemplate the use of negative interest rates. Selling
pressure in Sterling may also be amplified by growing
uncertainty about the outcome of Brexit. Last week, EU
and UK officials sent a chilling message about progress
¨C or more accurately, the lack thereof ¨C which
subsequently sank the Pound.
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ĦĦĦĦEUR/GBP Outlook
ĦĦĦĦEUR/GBP is testing the lower tier of the key
inflection range between 0.8986 and 0.9091 (purple-dotted
lines) where the pair had previously encountered both
upside and downside friction amid market-wide volatility
in March. If EUR/GBP shies away from clearing the multi-
layered ceiling, a subsequent pullback may ensue. In this
scenario, selling pressure may start abating when the
pair hits familiar support at 0.8687 (red-dotted line).
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Topic: EUR/GBP Chart Setup Ahead of ECB Minutes,
