The EUR/GBP pair initially broke higher during the course of the day on Thursday, but as you can see the 0.79 level offered enough selling resistance to push the market back down and form something along the lines of a shooting star. The candle of course suggests that we are going to go lower given enough time, and the fact that the previous week formed a shooting star doesn’t exactly dissuade me from selling either.
With that being said though, there is a significant amount of noise below current levels. With that, although I am very negative of this pair, I recognize that it will probably be a significant fight to get down to the bottom again. We are in a region that has been very important historically on the longer-term charts, so it’s not a big surprise to see this market struggling. It really can’t decide which direction it wants to go at the moment, but that being the case I recognize that it is difficult to hang onto any particular trade in this marketplace.
UK GDP numbers
The United Kingdom releases its GDP numbers quarter over quarter and year-over-year for Q3 today. That being the case, the market looks as if it is going to react against that number, and it could be the catalyst to push this market lower as the British pound itself looks like it’s being somewhat supported against the US dollar at the 1.60 handle, which of course is a large driver of value for the British pound. With that, it’s very likely that this market will continue to drift lower based on that alone, and the fact that the European Central Bank is probably going to have to expand monetary policy in order to fight the deflationary problems in the European Union, and as a result it’s likely that the Euro is going to continue to lose value in general while the British pound is at the very least going to be “less bad.” At the end of the day, that’s all that really needs to be true in order for this pair to continue dropping.
