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The week ahead overaly for the pound to euro exchange rate (GBP/EUR).
The pair simply cannot build up a head of steam and stage a meaningful recovery, leaving it limp and prone to further weakness over the coming days and weeks.
The pound fell after last week's UK inflation release read at a below-consensus 3.8% year-on-year, raising the odds of a year-end interest rate cut at the Bank of England.
The repricing in rate cut bets inevitably weighed on pound sterling, which recorded three successive daily closes against the euro. All the more disappointing (at least for those wanting a stronger exchange rate) is that pound sterling was unable to hold an initial bounce that followed Friday's better than expected PMI data.
The net result is a GBP/EUR at 1.1453 at the time of writing, having been as high as 1.1528 last week. Those with impending payment requirements are welcome to reach out to our dealing desk for a market-beating no-obligation money transfer quote.
As the chart below shows, the pair is capped by a descending trend line that simply won't be broken. Any rebounds can rise to this level, which means anything near 1.15 will now look to be top-heavy.
The nine-day exponential moving average (EMA), the blue line in the chart, is proving a magnet for price action, which implies scope for a shallow bounce from Monday's lows in the early stages of the week.
A move above the nine-day EMA is even possible, but strength should prove limited.
Ultimately, an initial recovery followed by renewed weakness and eventual move to range lows at 1.1413 is the preferred multi-day stance.
Sterling weakness is linked to lingering concerns about the country's finances and what next month's budget will deliver.
An unsavoury budget is well anticipated by markets, with tax rises galore and no credible committment to cutting spending.
Yet businesses, consumers and markets appear to have fully accounted for the negative event.
This means it's 'in the price' for Sterling, leaving limited space for a deep decline from here. It could even imply some scope for a relief rally into year-end once it passes.
Those with money transfer requirements over this period could do well to book their ideal rate in order to take advantage of beneficial market movements.