- The EUR/GBP has initially fallen during the trading session on Tuesday, but found enough support near the 0.86 level to turn things around and show signs of life again.
- On the way, this is a pair that will continue to be very noisy, and as it is typically so.
- After all, they are each other’s number one trading partner, so therefore the markets will be paying close attention to the differentials between the two economies. Right now, they both have pretty dire circumstances ahead of them, so be interesting.
The 200-Day EMA sits just below the 0.86 level, therefore it offers quite a bit of technical support. It’s also right at the bottom of the overall consolidation area though we have been in for a while, which extends up to the 0.88 level. If we can break above the 50-Day EMA just above, then I think it’s possible that the market can reset 0.88 level. Quite frankly, this pair spends a lot of time going sideways so that would be the most likely of scenarios from what I can see. After all, the Monday candlestick was rather strong, and it looks like we are seeing a bit of continuation from the attitude of the previous session, as we pulled back and then found reasons to go along again.
I Prefer Buying
If we break down below the 200-Day EMA, then it’s possible that the market could go down to the 0.85 level. The 0.85 level course has a large, round, psychological aspect to it that could attract a certain amount of attention, but I’m not necessarily worried about that at the moment. You can also see that we had originally shot all the way up to the 0.93 level after that disastrous budget was proposed by the Truss government, but we have since calmed down.
I don’t necessarily think that the British pound is the currency the people will be looking to get a hold of, but at the same time, I can say that the Euro is not necessarily something that you want to own either. In fact, this might be a great currency pair to use as a signal as to which one you want to short against the US dollar. That being said, right now it looks like we're ready to go back and forth more than anything else. As we are at the bottom of the range, I prefer buying.
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