Traders will be closely watching UK markets on Thursday with a major data drop due out early in the London session. There is a plethora of updates all scheduled to be released alongside each other, including Manufacturing Production and Industrial Production numbers, however without a doubt the most impactful is the latest GDP updates. The headline GDP month-on-month data is expected to show a 0.1% decline while the Preliminary quarter-on-quarter data is expected to indicate a 0.6% increase.
The market is anticipating good moves in the pound around the release of this data and EURGBP is setting up nicely for traders to take advantage of any big discrepancies in results from expectations. Crucially, trading sterling on the cross takes out any dollar influence on the trade and although Cable is likely to move strongly on the data, longer term moves could be set in without the complexity of the dollar that has been higher reactive to updates on geopolitics rather than fundamentals in recent weeks.
EURGBP is trading in the middle of recent ranges and has the capacity to challenge either side of these if we so see a big surprise on the data release. Anything much stronger-than-expected could fuel the fire for an even more hawkish MPC and see a drop in the pair with the initial target a very strong trendline support level on the daily chart, currently around the 0.8630 level. Whilst a weaker than expected number should see a good rally higher, with initial resistance at the May high and 200 day moving average currently at 0.8700.
Resistance 2: 0.8734 – Trendline Resistance
Resistance 1: 0.8700 – May High and 200 Day Moving Average
Support 1: 0.8632 – Trendline Support
Support 2: 0.8611 – 2026 Low
