Following the minor rise of the European currency last week, due to favourable macro-economic statistics of Eurozone, the pair started this week with the sharp decline. On Monday the pair EUR/GBP traded near the key resistance level of 0.7280 and then went down despite poor data on the British key indices. Over a few days the European currency has lost more than 150 points.
This morning European currency continued to decline, as business activity indices of France, Germany and Eurozone as a whole were negative. Te pair exceeded the local lows of 0.7125 and consolidated below this level.
On Friday, some important European statistics will be released and the head of ECB. Mario Draghi will make a speech. In the last few weeks fundamental news was not favourable to the European currency, triggering its decline. A question is whether the leader of ECB will find the words to support European currency? It is likely that Euro will continue to decline against the Pound as it is expected that economic growth in Germany will slow down and the main indices of European economies are in the red zone. At the same time, British statistics are positive and the demand for the Pound is high.
Support and resistance
In the medium-term the pair can reach the local lows of 0.7125 and go to the new lows of 0.7050, 0.7035 and 0.7015.
Support levels: 0.7125, 0.7110, 0.7100, 0.7085, 0.7050, 0.7035 and 0.7015.
Resistance levels: 0.7150, 0.7170, 0.7200, 0.7230, 0.7245, 0.7280, 0.7305, 0.7330, 0.7365 and 0.7410.
It is recommended to open short positions at the current price from resistance levels of 0.7170, 0.7230 and 0.7280 and take profit at the local lows of mid-March at the level of 0.7015.