EURGBP Technical Analysis: Price Action Remains Bearish
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Euro and Sterling Prices, News and Analysis
- Offer of bespoke UK Brexit deal sends Sterling soaring.
- EURGBP the best ‘Brexit Barometer’.
- EURGBP sitting on a confluence of support levels.
We have recently released our Q3 Trading Forecasts for a wide range of Currencies and Commodities, including GBP and EUR.
EURGBP May Fall Further if Support Proves Fragile
Wednesday’s comments by EU chief negotiator Michel Barnier indicating that the single bloc wanted to offer the UK a bespoke deal unsurprisingly sent Sterling higher across the board. While GBPUSD took the headlines as it edged back above 1.3000, the best Brexit barometer, EURGBP, fell below 0.9000 and looks set to fall further. EURGBP has rallied in the past couple of months on the never-ending stream of negative Brexit commentary, and had been pricing in a ‘hard’ or ’no-deal’ Brexit. With this now likely off the table, all things equal, these recent gains look likely to be taken back with the possibility of the pair falling by another 2 cents.
Before this eventual fall. The pair have to negotiate a cluster of support levels which may prove difficult in the short-term. The 23.6% retracement level of the April-August rally is at 0.89859, a fraction above the 20-day moving average at 0.89846, while the March 7 swing-high cuts across at 0.89680. On the downside a break below the recent uptrend line would open up the 50-day ma at 0.89239 ahead of the 38.2% Fibonacci retracement at 0.89181.
EURGBP Daily Price Chart (February – August 30, 2018)
Retail Remain Net-Short of EURGBP
IG Client Sentiment shows retail investors are net-short of EURGBP but recent daily and weekly sentiment shifts negate the usual contrarian rule and indicate that EURGBP may soon move lower.
DailyFX chief currency strategist John Kicklighter is also bullish GBP but prefers to express this via long GBPUSD and GBPCHF set-ups.
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--- Written by Nick Cawley, Analyst
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