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Andreas Zanin
Analysis | June 8, 2021

KTM FX Weekly: Consolidation at pivotal

The British Pound has been remaining silent against the EUR for the past three weeks. As a result, EURGBP raises the floor from 0.8470-0.8500 to 0.8570 levels. On the weekly chart, the cross printed RED for the past six weeks, and this is the fifth time the cross repeated the six weekly downfall cycles. Does this mean the downfall cycle ends? It is too early to confirm that unless the cross closes above 0.8720 weekly.

 

Current range: 0.8470-0.8720 

In the next coming five trading sessions, we expect the cross could come out of the range. Two key events used to forecast this are the June ECB meeting and exit lockdown on June 21. UK government will announce its decision on June 14. Including today we have five trading sessions, so brace for the action. 

Currently, the market holds a mixed view on exit lockdown either on June 21 or two weeks delay until July 05. In case of delay, the Pound will be soft against the EUR until we hear the exit lockdown news. 

Coming to the June ECB meeting, we still expect that ECB will lower PEPP from the current 80bn per month to at least 70bn in the coming quarter. Our key focus remains on the interest rate outlook, economic projections, and taper talk. ECB doesn’t want stronger EUR, so taper talk in the June meeting will be avoided. 

 

Data-wise, it will be quiet for the Pound, but things will get busy from Thursday as ECB is going to deliver its monetary settings followed by UK GDP on Friday. 

 

TECHNICAL OVERVIEW

The weekly pivotal spread between 0.8580-0.8560, below here 0.8530 and 0.8500 and 0.8470 exists—overall thick multi-layer support available below 0.8530 levels. 

Any violation of the 0.8470 level may cause a clean slide towards 0.8400 and 0.8300 levels. Flipside, any decisive breakout above 0.8720 levels may provoke strength towards 0.8860. Until such time, wait for support levels.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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