EURGBP TECHS: Corrective Pullback
- RES 4: 0.8530 76.4% retracement of the Aug 8 - Dec 19 ‘24 bear leg
- RES 3: 0.8494 High Aug 26 ‘24
- RES 2: 0.8474 High Jan 20 and a key resistance
- RES 1: 0.8450 High Mar 11
- PRICE: 0.8422 @ 16:27 GMT Mar 14
- SUP 1: 0.8369/8339 Intraday low / 50-day EMA
- SUP 2: 0.8299/41 Low Mar 5 / 3 and a near-term bear trigger
- SUP 3: 0.8223 Low Dec 19 and a key support
- SUP 4: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range
A bull cycle in EURGBP remains in play and the latest pullback appears corrective. The move down is allowing an overbought condition to unwind. Initial firm support to watch lies at 0.8339, the 50-day EMA. Recent gains have resulted in a breach of 0.8419, 76.4% of the Jan 20 - Mar 3 bear leg. This paves the way for a climb towards 0.8474, the Jan 20 high and the next key resistance.
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GBPUSD TECHS: Resistance Remains Exposed
- RES 4: 1.2667 High Dec 19
- RES 3: 1.2610 38.2% retracement of the Sep 26 ‘24 - Jan 13 bear leg
- RES 2: 1.2576 High Jan 7
- RES 1: 1.2550 High Feb 5
- PRICE: 1.2430 @ 16:04 GMT Feb 12
- SUP 1: 1.2333/2249 Low Feb 11 / 3
- SUP 2: 1.2161 Low Jan 17 / 20
- SUP 3: 1.2100 Low Jan 10 and the bear trigger
- SUP 4: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
GBPUSD found support Tuesday but for now, the pair continues to trade below its Feb 5 high. Price recently traded above the 20- and 50-day EMAs, and pierced 1.2523, the Jan 27 high. A resumption of gains would signal scope for a move towards 1.2610, a Fibonacci retracement. Key short-term support to watch has been defined at 1.2249, the Feb 3 low. Clearance of this level would instead highlight a reversal and strengthen a bearish threat.
SWITZERLAND DATA: January CPI Preview [2/2] - Energy To Drag Headline
- Focus within the print lies on domestic and services inflation, with the latter's momentum (3m/3m Saar) measure having decelerated significantly during 2024 (to 0.89% from 2.38% Dec'23). A continuation of that trend should also see the Y/Y rate, currently at 1.60%, further decelerate.
- Electricity prices will see around a 10% M/M decrease in January according to national electricity commission Elcom, which would have around a 0.2pp negative contribution to headline CPI - and thus fully accounts for its expected deceleration in January.
- However, there are only five analysts in the Bloomberg survey forecasting core CPI. And the median (and mean) of their headline CPI forecasts is 0.3%Y/Y (a tenth below the wider consensus). So it seems as though these analysts take into account the change in electricity prices with a further negative contribution from core items.
- Additionally, the January release should also bring a basket reweighting - which we do not expect to bring a material impact on the overall inflation rates, though.
- Looking further ahead, a UBS survey sees nominal wage growth at 1.4% in 2025 - similar to a KOF study looking at 1.6% (compared to around 1% average during the 2010's according to UBS), so some pressure remains here.
SWITZERLAND DATA: January CPI Preview [1/2] - Energy To Drag Headline
Swiss January CPI (released 07:30 GMT / 08:30 CET Thursday) is expected by consensus to decelerate 0.2pp to 0.4% Y/Y. On a sequential basis, consensus is for -0.1% M/M (-0.1% Dec) while core inflation is expected at 0.6% (0.7% Dec).
- The December SNB conditional inflation forecast for Q1-25 is 0.3%. A print in line with consensus at 0.4%Y/Y would therefore be above that and need inflation to come in lower in Feb/Mar in order to not exceed the Q1 forecast. However, it is worth noting that the SNB does expect further deceleration ahead: for Q2 it forecasts CPI at 0.2%.
- So if we get a 0.4%Y/Y print in January, it is not necessarily inconsistent with the SNB's quarterly path.
- We note that consensus is also skewed to the downside, with the average Y/Y headline estimate standing at just 0.36%.
