Forex: EUR/GBP bounces back and extends gains

FXstreet.com (Barcelona) - After hitting as low as 0.8426, the EUR/GBP bounced back as investors digested the UK consumer credit and manufacturing PMI data, forcing the British Pound to ease. The cross returned to its highs around 0.8450 and is attempting at extending gains further despite the publication of February unemployment rate in the Eurozone, a record high at 12.0%.

The German manufacturing PMI came in slightly higher than expected, at 49.0 from 50.3 (consensus at 48.9). It still doesn’t hide the fact that manufacturing turned contractionary in March. The EMU figure eased from 47.9 to 46.8 (consensus of 46.6). The Italian manufacturing PMI eased from 50.8 to 48.3 (consensus at 50.2). The French number had a slight upward move, from 43.9 to 44.0, but still contractionary. The Spanish figure fell from 46.8 to 44.2 (consensus at 46.0). Investors will be awaiting the German CPI report at 12:00 GMT.

UK money supply fell -0.5% in February, instead of rising 1.1% as expected. The annualized figure improved from -0.8% to +0.5%. Net Lending to Individuals rose £1.6B, beating £0.9B consensus. Consumer credit rose £0.6B, above expectations of £0.3B. Mortgage Approvals disappointed by easing from 54.187K (revised from 54.719K) to 51.653K (consensus at 54.000K).

UBS analysts are bearish: “The risk is for extension of weakness to test support at 0.8362 in the near-term, a breach of which would open 0.8285”, wrote analyst Gareth Berry, pointing to resistance at 0.8499 ahead of 0.8561.