Data earlier today showed that UK manufacturing output rose in Sept at the fastest monthly pace since April 2014 and the country's goods trade deficit narrowed more than expected. Despite the improvement, the ONS said trade will likely make a negative contribution to UK economic output in Q3.
ONS said the latest industrial production figures would have a negligible impact to its estimate for economic growth in the July-Sept period, which slowed to 0.5 percent on the quarter. Sterling fell to $1.5169, down 0.3 percent on day.
Relentless selling in sterling which continued after a weak UK data is pushing EUR/GBP to fresh session highs by 0.7188. The pair to test resistance by cloud base at 0.7193, breaks above could see the pair at 0.7250 levels.
Daily Stochs have rebounded from oversold levels and RSI is strong pointing North. We recommend to go long on breaks above 0.7195, placing stops at 0.7150, and targeting 0.7250 levels.
Support on the downside are seen at 0.7153 (10 DMA) and further below at 0.7052 which is strong trendline support.
Resistance Levels:
R1: 0.7111 (Daily High Nov 4)
R2: 0.7145 (10 DMA, High Nov 3)
R3: 0.7152 (Tenkan-Sen)
Support Levels:
S1: 0.7055 (Daily Low Nov 4)
S2: 0.7027 (Daily Low Aug 18)
S3: 0.7016 (Daily Low Aug 7)
