Morning Brief – The other side of the coin

Charles Porter
Tue 31 Oct 2023

The other side of the coin

After a short-lived period of revived volatility, ranges within EURGBP are becoming muted once again. Even for a major currency pair, the lack of volatility and tight ranges within EURGBP through the summer months was disturbing. Eventually a break of this range in favour of the Euro allowed some volatility to reemerge. Following the technical break of summer’s trading range, it is too early to conclude that a new range has been defined. Even whilst markets continue to establish the new short-term ranges for the currency pair, trading behaviours remain very orderly. As many traders are even calling it: boring.

With such lacklustre trading within the pair, it is often hard to separate the technical signal from the noise. So often recently, the story of the Euro has been sidelined. Even most movements in Euro crosses have been analysed from the point of view of the counter currency. However, with some meaningful data being published in the Eurozone this month, a more Euro-centric analysis could be required.

Recent data has shown that core Eurozone economies have had more resilient economic growth than many expected. Whilst this could be a good thing, fast moving economic sentiment data has showed that consumer and business confidence has not kept pace with such statistics. We therefore have an environment of declining expectations despite sanguine hard data. This can be particularly damaging to economies and create self-fulfilling economic downturns later down the road. 

Discussion and Analysis by Charles Porter

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