EUR/GBP Price Outlook - Trading Range Continues to Offer Opportunities
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Euro and British Pound (EUR/GBP) Price, News, and Analysis:
- EUR/GBP respecting support and resistance.
- Client sentiment however is increasingly bearish.
The British Pound is trapped in a rough one-and-a-half-point trading range against the Euro and it seems likely that this will remain the case for the foreseeable future. Both GBP and EUR are picking up a small bid, slightly more so for Sterling, and this is keeping the two locked in a tight range with volatility ebbing lower. The daily chart is showing mixed technical signs with the simple moving averages jumbled, while the market is just coming out of oversold territory. While trading ranges may not seem as exciting as a range breakout, having a fairly well-defined range can offer repeated opportunities with reduced risk if this range continues to hold.
Next week the data calendar is fairly quiet with the second EU GDP reading on Tuesday, UK inflation on Wednesday before EU and UK flash PMIs on Friday are released. With risks fairly evenly balanced, next week’s economic calendar is unlikely to produce a range breaker. For all market-moving economic data and events, see the DailyFX Calendar.
The recent range between 0.8580 and 0.8720 looks set to continue in the short-term, with resistance seen as slightly more dominant than support. The recent shift in retail positioning (see below) confirms a bias towards lower prices.
EUR/GBP Daily Price Chart (November 2020 - May 14, 2021)
IG Retail trader data show 62.33% of traders are net-long with the ratio of traders long to short at 1.65 to 1. The number of traders net-long is 3.05% higher than yesterday and 32.92% higher from last week, while the number of traders net-short is 2.51% lower than yesterday and 22.71% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall.Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/GBP-bearish contrarian trading bias.
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.
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