Euro outlook is positive should ground above 0.8465 be maintained; target 0.8565

The euro pound exchange rate is barely maintaining its gains in line with broad-based euro weakness sparked by lacklustre Eurozone economic statistics released today.

According to the most recent analysis of the euro pound exchange rate by the team at Action Forex the euro is likely to continue to struggle to find upward momentum.

Analysts at Action Forex say:

"The pair is still fluctuating around 0.8500 and is trying to gain enough positive momentum to extend the upside move. Generally, our expectations of a bullish move is intraday valid unless levels 0.8465 were broken and the pair stabilised below it."

Support for the EUR-GBP is seen at 0.8465, 0.8430, 0.8395, 0.8345, 0.8300
Resistance levels are at: 0.8500, 0.8535, 0.8565, 0.8600, 0.8635

"Based on the charts and explanations above, we prefer to long the pair above 0.8465 targeting 0.8565 and 0.8635. Stop loss with four-hour closing below 0.8395 might be appropriate," say Action Forex.

Longer-term outlook for British pound improves with construction data release

On the fundamental front we note foreign exchange markets have paid passing attention to the latest construction output data which was much better than expected, posting a fall of –1.1% on the year after a –7.4% fall last month and a –4% fall expected by consensus.

"Although construction is a small part of the UK economy, it is a volatile sector and today’s reading should provide another upside for Q2 GDP," says Greg Moore at TD Securities.

Similarly, fundamental data out of the eurozone today has been of little aid to the euro.

The final reading of Eurozone May CPI was unrevised at 1.4% Y/Y, with core CPI remaining at 1.2% Y/Y. Elsewhere, the ECB confirmed that banks are to repay €3.19bn of their 3-year LTRO borrowings next week.

So we would expect technical considerations to be of importance to the foreign currency markets today.