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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

GBP/USD and EUR/USD come off their recent highs while EUR/GBP consolidates

​Outlook on EUR/USD, EUR/GBP and GBP/USD as they consolidate post European PMI data.

EUR/USD consolidates below parity

EUR/USD’s near 5% rally from its $0.9536 fresh 20-year September low faltered just below parity amid weaker than expected Eurozone purchasing managers index (PMI) data which continues to point towards a possible recession.

The cross thus slid back to its two-week support line and may soon revisit the $0.9855 late September high. Further down minor support can be found around the $0.98 mark and also at the 3 October low at $0.9753.

In case of the minor support line holding, parity may be revisited. Slightly above it the 55-day simple moving average (SMA) and the February-to-October downtrend line can be spotted at $1.0025 to $1.0038 and are likely to cap the upside this week.

EUR/GBP consolidates post weak Eurozone PMI data

EUR/GBP has been trading in a less volatile fashion than last week when it shot up to its £0.9283 two-year high on the back of the UK’s mini budget which introduced the biggest tax cuts in 50 years.

Following the government’s partial U-turn on Monday, EUR/GBP slid to this week’s low at £0.8649 before consolidating amid weak Eurozone PMI data and while awaiting UK construction PMI data.

Further sideways trading seems to be at hand with minor resistance sitting at the £0.8787 mid-September high. If overcome, the 26 and 28 September lows at £0.8853 would be next in line. Below the recent low at £0.8649 lies the mid-September low at £0.8626 and the 55-day SMA and early September low at £0.8587 to £0.8567.

GBP/USD consolidates below this week’s high made close to $1.15

GBP/USD’s 11% rally from its all-time low at $1.035 following the UK governments largest, by some seen as unfunded, tax cuts in 50 years, seems to have stalled marginally below the $1.15 mark.

Monday morning’s U-turn on the abolishment of the UK higher earners 45p tax rate cuts, only saving of around £2 billion out of a £45 billion fiscal loosening programme, and Wednesday’s decision by the Chancellor of the Exchequer Kwasi Kwarteng to freeze tax thresholds, which in three years’ time will deliver an extra £41 billion amid high inflation and rising wages, have not helped the pound which has so far slid back to $1.1228.

GBP/USD now trades below minor technical resistance seen between the 7 and 16 September lows at $1.1351 to $1.1406 while immediate support below $1.1228 can be found along the two-week support line at $1.1178.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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