EURGBP TECHS: Trading Closer To Its Recent Lows

• RES 4: 107.065 High Jan 2
• RES 3: 106.965 High Jan 3  
• RES 2: 106.695 High Jan 21 / 22
• RES 1: 106.707 20-day EMA      
• PRICE: 106.525 @ 06:01 GMT Jan 27   
• SUP 1: 106.450/435 Low Jan 24 / 15 and the bear trigger             
• SUP 2: 106.375 Low Oct 31  (cont) and a key support
• SUP 3: 106.342 2.764 proj of the Dec 2 - 6 - 12 price swing
• SUP 4: 106.255 3.000 proj of the Dec 2 - 6 - 12 price swing

A medium-term bear cycle in Schatz futures remains intact and recent gains appear corrective. The Jan 15 recovery highlighted a reversal and the start of the corrective phase. Key short-term resistance at 106.707, the 20-day EMA, remains intact for now. On the downside, 106.435, the Jan 15 low has been defined as the bear trigger. Clearance of this level would confirm a resumption of the downtrend.

• Morgan Stanley has downgraded its UK 2025 GDP forecast to 0.9% and tweaked the timing of its BOE call while still looking for 3.50% by year-end. They note that "taking on board the commentary since December and the data flow... we suspect the balance of risks around growth and inflation is not quite yet tilted enough for the MPC to signal willingness for sequential near-term insurance cuts."
• It now looks for cuts in February, May, June, August and November to 3.50% by end-2025 (rather than February, March, May, August and November).
• However, MS "still see the chance of action in March as higher than the market prices."

• RES 4: 1.2610 38.2% retracement of the Sep 26 ‘24 - Jan 13 swing 
• RES 3: 1.2576 High Jan 7     
• RES 2: 1.2520 50-day EMA 
• RES 1: 1.2502 High Jan 24 
• PRICE: 1.2458 @ 06:37 GMT Jan 27
• SUP 1: 1.2294 Low Jan 23  
• SUP 2: 1.2229/2100 Low Jan 21 / 10 and the bear trigger
• SUP 3: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
• SUP 4: 1.2037 Low Oct 4 ‘23 and a key support     

Friday’s gains in GBPUSD reinforces current bullish conditions. The pair has traded cleanly through the 20-day EMA, marking an extension of the reversal that started Jan 13. The break higher exposes the 50-day EMA, at 1.2520 and an important resistance. Clearance of the average would highlight a stronger bull cycle. The medium-term trend remains bearish. A reversal lower would refocus attention on 1.2100, the Jan 10 low and bear trigger.