By Candice Zachariahs
Aug. 28 (Bloomberg) -- The euro will extend this month’s gains against the pound as a “bullish reversal” shows the currency’s decline since December may be over, BNP Paribas SA said, citing trading patterns.
The 16-nation currency has risen for eight days versus the pound, its longest run of gains since the December slide began, and has closed above so-called resistance at 87.85 pence, a sign it will make further gains, according to a team of analysts led by Hans-Guenter Redeker, head of currency strategy at BNP Paribas in London.
“Weekly momentum is not overbought but accelerating and rising at the briskest pace since the February to March advance,” the analysts wrote in a note to clients yesterday. “All these bullish factors suggest the March decline is complete, and maybe the entire December decline.”
The euro rose 0.1 percent to 88.18 pence as of 10:24 a.m. in Tokyo from 88.07 yesterday in New York. The currency slumped 14 percent from its record high of 98.03 pence on Dec. 30 to this year’s low of 84.01 pence on June 22.
The euro may now strengthen toward 88.45 pence, with a break above that level indicating it may gain toward 88.65 pence, the analysts wrote.
Resistance refers to an area where sell orders may be clustered. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
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