EUR/GBP – UK Employment Data vs Euro-Zone GDP
Market practical lesson: A great example of why not to trade before a high profile economic event.
Today, Market participants experience a well-known phenomenon, named “shake-out”. It is an activity that is being made by big FX players that are well-informed and has technology and tools that small traders does not have access to.
Your capital is at risk
Before the today’s economic events releases, the Euro vs the Great Britain Pound cross currency pair consolidated in a tided 15 pips price range, between 0.91150 and 0.91300. One hour before the UK Jobs data publication the volatility spiked and the pair bounce, doubling the price range higher to 0.91450. 30 minutes later and 15 minutes before the print, the market flipped in a mirror activity, breaking the range from the downside at the same accurate range of 15 pips towards the 0.91 round mark. Here is how it looks in the chart:
One hour Before the UK Jobs data schedule:
The speculation activity before the event:
The UK Employment Data report that was published by the UK National Statistics showed a significant decrease in the number of people claiming unemployment benefits while they are looking for work.
The event generated immediate positive momentum for the nation currency against all its major counterparts, including its neighbor currency.
The change after the UK Jobs data outcome:
The Euro-zone Gross Domestic Product readings that was published 30 minutes later, came in slightly higher than economists forecast reflecting 2.2% growth year over year.
As a result the EUR/GBP cross pair corrected a bit upward, hovering around the 0.91 round mark.
Here’s the market participants’ reaction after the Euro-Zone GDP release:
The Long-Term picture shows that the exchange rate has reach to the decade highs, the strongest resistance level, before the 0.94 and the 0.96, 2009 price fluctuation and the extreme all time high level 0.98 at the end of 2008.
What’s next?
Taking into consideration of the long-term picture and the economic facts that already priced in the market, the pair should reasonably range between the 0.91500 and 0.90000 round mark with expectation for a major event that develop the next trend direction.
Yaron Mazor is a senior analyst at SuperTraderTV.
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