- The euro plunged to an over 1-week trough against the British pound as investors continued to digest yesterday's economic growth data.
- British economic growth showed no change in the fourth quarter despite market expectations that it would be slower, reassuring investors that the Bank of England was unlikely to pursue a looser monetary policy.
- Preliminary data for fourth-quarter gross domestic product showed the UK economy grew 1.1 percent year-on-year, the same as in the previous quarter.
- However, concerns over Britain’s trade talks with the European Union capped the upside in the British currency.
- EUR/GBP is trading 0.1 percent down at 0.8416, having hit a low of 0.8413 earlier, its lowest since February 3.
- Technical indicators are bearish: RSI weak at 42.28, MACD supports downside and Stochs are biased lower.
- Immediate resistance is located at 0.8440, a break above could take it near 0.8453.
- On the downside, support is seen at 0.8406, a break below could drag it till 0.8385.
Recommendation: Good to sell on rallies around 0.8424, with stop loss of 0.8431 and target price of 0.8406.
