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EUR/GBP Technical Analysis: Upside Correction Under Way?

EUR/GBP Technical Analysis: Upside Correction Under Way?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/GBP Technical Strategy: Flat
  • Euro validates signs of bearish exhaustion, breaks higher vs. Pound
  • Booking profit on short exposure as larger correction looms ahead

The Euro turned higher against the British Pound as expected, with prices breaking the boundaries of the near-term down trend in play since mid-November. The dominant trajectory continues to favor weakness but a larger correction upward may be in the cards ahead.

From here, a daily close above the 23.6% Fibonacci retracement at 0.8522 opens the door for a test of the 38.2% level at 0.8656. Alternatively, a move back below the 14.6% Fib at 0.8439 paves the way for a challenge of double bottom support at 0.8330.

A EUR/GBP position was set to activate at 0.8994 and partial profit subsequently booked after prices reached the trade’s initial objective. Remaining exposure will now be booked as positioning warns of a near-term bias shift ahead of a much-anticipated ECB rate decision.

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

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