News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
EUR/GBP Testing Resistance Ahead of Pivotal EU Council Meeting

EUR/GBP Testing Resistance Ahead of Pivotal EU Council Meeting

Nick Cawley, Strategist

EUR/GBP Price, News and Analysis:

  • Will the EU and UK decide that a deal can be reached?
  • EUR/GBP trapped in a narrowing range.
Advertisement

Crucial European Council Meeting Next Week

Trade negotiations between the EU and UK are set to dominate the headlines next week ahead of the two-day European Council meeting starting on Thursday. This meeting has always been seen as a make-or-break event to see if a trade deal can be reached with the UK, or if not then the focus will fully turn to the EU trading with the UK on WTO-terms from January 1, 2021. UK PM Boris Johnson has also said that he needs to know by October 15 if a deal is possible. This deadline, however, can still be broken, especially if there is a chance of a deal. EU chief negotiator Michel Barnier has already said that he will continue to negotiate until the end of October if a deal seems possible, while PM Johnson will not throw away the opportunity of a deal for a matter of a couple of weeks. The lead up to next week’s meeting will see increased news flow and narrative and Sterling’s volatility will rise in tandem.

EUR/GBP is currently trapped between 20-dma resistance and 50-dma support with both simple moving averages holding sway over the last two weeks. A recent series of lower highs were broken, just, on Wednesday, taking the edge out of the prevailing bearish sentiment and a break and close above the 20-dma should see 0.9155 to 0.9165 come back into play ahead of the 23.6% Fib retracement at 0.9213. A break below the 50-dma at 0.9066 opens the way to the 200-dma at 0.8948 and the 38.2% Fib retracement at 0.8891.

EUR/GBP Daily Price Chart (January – October 9, 2020)

EUR/GBP Testing Resistance Ahead of Pivotal EU Council Meeting

IG Retail trader datashows 45.87% of traders are net-long with the ratio of traders short to long at 1.18 to 1.The number of traders net-long is 2.73% lower than yesterday and 11.75% higher from last week, while the number of traders net-short is 8.35% lower than yesterday and 8.60% higher from last week.We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/GBP prices may continue to rise.

Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/GBP price trend may soon reverse lower despite the fact traders remain net-short.

What is your view on EUR/GBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES