GBP/EUR exchange rate stuck around the low 1.19 levels - is a rebound in store?

Last Updated on Tuesday, 29 May 2012 15:15 Written by Will Peters Wednesday, 28 March 2012 14:14

The pound to euro exchange rate has found support around the upper 1.19 levels as the UK currency takes a break from recent falls.

A note from UniCredit Bank says: "Cable is still benefiting from the retreating US dollar with the 1.60-1.6050 test still in the spotlight. Given similar EUR-USD behavior at present, EUR-GBP should continue to remain stuck at around 0.8350."

Currency majors are now consolidating waiting for the results of the euro-area summit this weekend, but the US dollar could stay cornered if US data cast new doubts on the US recovery in the meantime.

The EUR-USD remains firm, but failed to break above 1.34, as markets are not eager to ride a new EUR-USD rally due to the EMU risk picture.

Consolidation in the upper bound of the 1.30-1.35 band should continue suggests UniCredit.

Elsewhere, both the Australian dollar and the New Zealand dollar are still struggling at around 1.04 and 0.82, "but we suspect that there are still risks of more swings here before strong buying pressure could definitively reemerge," warns the Italian bank.  

Meanwhile the yen is resuming a bearish tone, as the seasonality related to the Japanese fiscal year has mostly faded. Buying USD-JPY below 83 is again favored, while EUR-JPY should hold the line above 110 for now.