GBP/EUR Exchange Rate Could Test 2012 Peak in Coming Days

The GBP/EUR retreated from the highs of 1.28 seen last week to trade at lows of 1.2687 as traders booked profits following the recent strength; but is attempting to recapture ground in the immediate term.

The pound to euro exchange rate (GBP/EUR) is seen trading unchanged on a day-to-day basis (morning of 24/09) having reached 1.2755.

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Forecasting 2012 Maximum for Pound Euro Rate to Be Tested

"The pair finds initial resistance at 1.2772 with further resistance lying at the 2 year high of 1.2804, there is a level of support lying at Friday’s low and then 1.2648 after that," says a note from IFX.

According to Bill McNamara at Charles Stanley the outlook could see 2012 levels tested soon:

"The next upside target is going to be the peak from July 2012, at 1.285, and it would not be surprising if that level was tested at some point over the next few weeks."

Pound vs Dollar: Strong Resistance Seen Ahead

Turning to the Cable (GBP/USD) we note the outlook remains challenging for those holding out for a stronger GBP.

Luc Luyet has studied the charts and tells us:

"GBP/USD recovery above the 1.6500 handle has faltered. Failure to rally above key resistance at 1.6644 (see also the 200 day moving average) signals a period of sideways trading. Hourly supports can be found at 1.6345 (intraday low) and 1.6247 (18/09/2014 low).

"In the longer term, the collapse in prices after having reached 4-year highs has created a strong resistance at 1.7192, which is unlikely to be broken in the coming months.

"Monitor the recent rebound as it could signal the start of a medium-term consolidation phase. A support lies at 1.6052, while a strong support stands at 1.5855 (12/11/2013 low).

"The first objective at 1.6495 of our long strategy has been reached. We have updated our stop-loss."

Markets: UK Equities Hit by Tesco Shocker

Turning to the UK financial markets at the start of the new week, a Fresh profits warnings from Tesco rocks the FTSE sending the market 40 points lower by mid-morning.

"Considering all the problems that Tesco is tackling at the moment, with its market share being eaten into, profit margins being squeezed and its competitors starting a price war, poor internal accounting issues was the last of its needs," says Alastair McCaig at IG.

A downgrade of 23% for its profit forecast is more than a minor issue and has subsequently seen sellers force the share price down by over 8.5%.

McCaig points out that the food retailer has now suffered four profit downgrades in a row, and the more cynically minded investors will be asking how much more than the reported £250 million black hole the investigative accountants might find.

Elsewhere, Phones 4U continue to hog the headlines as Dixons Carphone, Vodaphone and EE continue to pick over the carcass of the high-street retailer.

The continuing work on remodelling its outlets along with higher marketing costs have seen Moss Bros come in just under its previously stated first-half pre-tax profits.