It seems good buying support is occurring below 0.8400, although EUR/GBP can’t find any real upside traction. Weak eurozone industrial production (down 1.5%) curtailed the rally and could have negative ramifications on future PMI manufacturing reads. We also heard relatively upbeat comments from BoE officials and they largely didn’t push back on the rise in rate hike expectations as much as we had expected, thus the pound didn’t fall as much as we had hoped.
We stay on the sidelines for now and continue to like selling rallies in this pair given the short-term oversold nature of the pair.
On a side note, our ‘one to watch’ from last week hit our proposed target of $1345 and thus we revert to the sidelines, although momentum favours further downside. We feel gold has the potential to fall to the 61.8% retracement of the $1337 to $1433 rally at $1307 in the medium term. Gold chart below.