EURGBP TECHS: Support Remains Exposed

• RES 4: 0.8800 Round number resistance 
• RES 3: 0.8781 2.236 pro of the Mar 3 - 11 - 28 price swing
• RES 2: 0.8738 High Apr 11 high and a key resistance
• RES 1: 0.8698 High Jul 16
• PRICE: 0.8672 @ 17:03 BST Jul 21
• SUP 1: 0.8630 Low Jul 14
• SUP 2: 0.8615 20- day EMA
• SUP 3: 0.8551 50-day EMA
• SUP 4: 0.8508 Low Jun 27

The trend outlook in EURGBP is bullish and the cross continues to trade closer to its recent highs. Fresh cycle highs last week maintain the price sequence of higher highs and higher lows and note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on key resistance at 0.8738, the Apr 11 high. Support to watch is unchanged at 0.8615, the 20-day EMA.

Overnight reverse repo takeup rose to a 5-session high $213.6B Monday, up $14.4B from Friday.

• The pickup keeps the ON RRP facility size within recent ranges, however, and is likely to see some pullback later in this week on net Treasury bill settlements of over $60B.
• As we noted last week in our overview of recent Fed balance sheet trends, both overall bank reserves and overnight reverse repo takeup will decline over the coming 2 months as Treasury issues large quantities of  bills in order to build a cash pile north of $800B by end-September.

• The 29 analysts reviewed below unanimously expect the ECB to pause this week with a 2% deposit rate.
• A strong majority then look for a 25bp rate cut in September to 1.75% along with the refreshed economic projections, although a non-trivial 5 of 29 expect 2% to be the bottom for the cycle.
• There is only circa 12bp of cuts priced for the September meeting.
• The median terminal is seen at 1.75%: 10 look for 1.50%, 13 for 1.75% and 5 for 2.00%.