EUR/GBP: banks foresee further increase

The pair approaches the significant resistance at 61.8% Fibo level. Look for the breakout!

Banks’ forecasts

According to Rabobank, EUR/GBP may surge to 0.92. This movement can be caused by no-Brexit agreement. In addition, the combination of Brexit uncertainties and the COVID-19 economic damage may force the Bank of England to take extra measures to support the economy such as negative interest rates. In comparison with other countries, which have already imposed negative rates, the UK has an account deficit. This situation put the British pound under threat. Analysts from Commerzbank assured that if EUR/GBP breaks through the resistance at 0.9056, the pair may point to the 0.9129 resistance.

Fundamentals

The British GDP came out much worse than analysts expected. It turned out 1.8%, while the forecast was 5.5%. Thus, the British pound got an additional headwind amid the current risk-off sentiment.
The EU got a mixed data today: the poor industrial production and the positive ZEW economic sentiment. Investors shrugged off the negative data. As a result, the Euro bulls became stronger today.

Technical tips

EUR/GBP has sharply rose since yesterday. It approaches the key resistance at 61.8% Fibonacci retracement level at 0.9084. If it breaks it through, the pair may surge to the 78.6% Fibo level at 0.9125. Support levels are at 0.9056 and 0.9029.

Kseniya Medik