GBP/EUR has pulled back sharply from its 1.20 highs but it remains a little too early to tell whether the pair has started a new bearish downtrend yet or not.
GBP/EUR is trading at 1.1748
A decline in UK Manufacturing weakened the Pound against the Euro on Tuesday.
The data showed a fall in Production of -0.9% (mom) in October when analysts had expected a 0.2% rise.
The pair has now fallen from highs of 1.2045 established on Monday to their current level in the mid-1.17s.
Whilst the move looks strongly bearish it is still too early to say whether it is merely a pull-back or the start of a new trend lower.
The ECB rate meeting today could see more volatility for the Euro and may be the deciding factor for the pair – although ideally, we would want to see a break below the trendline from the October lows for further confirmation of more downside.
Support levels lie at 1.1560 and 1.1380 below.
One compelling technical indication that the trend may have changed from bullish to bearish is that the MACD indicator has crossed below its zeroline.
Another is the bearish key reversal day at the 1.2045 highs, which looks like it might be a fairly major top.