EUR/GBP, Euro, Sterling, Brexit – TALKING POINTS
- EUR/GBP heading for critical resistance
- Will the pair begin to reverse downtrend?
- Brexit drama could induce high volatility
Learn how to use political-risk analysis in your trading strategy !
The Euro may rise against the British Pound in the week ahead with EUR/GBP appearing to rebound after it hit a four-month low at 0.8786 (gold dotted line). The next major price level may be former support-now-turned resistance at 0.8917 (white speckled line).
EUR/GBP Outlook: Recovery Ahead?
EUR/GBP chart created using TradingView
EUR/GBP’s potential turn-around comes after the pair retreated over five percent after it reached a three-year high on the back of closing higher for 14 consecutive weeks. A weekly chart illustrates EUR/GBP’s spectacular fall after it broke through a multi-month rising support zone (yellow channel).
A Daunting Path Ahead
EUR/GBP chart created using TradingView
However, the road to recovery remains formidable, though recent history has shown that unexpected fundamental developments – primarily related to Brexit – can provide a boost to the pair. However, traders may be cautious about committing capital on the basis of hoping that growing fears of a no-deal Brexit will pressure Sterling and push EUR/GBP higher.
Instead, they may wait for the pair to clear resistance at 0.8917 with follow-through before adding additional exposure. However, as noted in previous Euro-Sterling forecasts, performing technical analysis on any GBP crosses is unusually difficult due to it being chained to a fundamentally volatile environment.
EUR/GBP TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
