Nov. 7 (Bloomberg) -- The euro may weaken beyond a one-year low against the British pound if it breaks below its 200-week moving average, according to Bank of America Corp.
The 17-nation currency is trading within half a pence of its 200-week moving average versus the pound, a level that it hasn’t broken through since September 2007. If the euro does trade below 85.46 pence it could depreciate as much as 3.8 percent, according to MacNeil Curry, head of foreign exchange and interest rates technical strategy at Bank of America in New York.
“It looks like it’s poised for another leg lower because you’ve got the 200-week there and because we haven’t been below there since 2007,” Curry said in a telephone interview. “The break of that 200-week will bring some additional interest. Euro-sterling remains vulnerable.”
The euro was little changed at 86.03 pence at 9:51 a.m. in New York. It has appreciated 0.1 percent so far this year and lost 0.4 percent this month.
The shared currency has traded above and below its 50- and 100-week moving averages against the pound since August. While the break below the 200-week moving average won’t change the currency pair’s longer-term trend, it will drive the euro to as low as to 82.52 pence, a level not seen since September 2010, Curry said.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
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