The EUR/GBP pair is a very interesting pair to pay attention to at the moment. There are a lot of different things moving it back and forth, and it is of course the epicenter of all things currency related when it comes to the so-called “Brexit.” Because of this, it’s very important to pay attention to this cross right now.
You can see that we’ve obviously been very bullish as of late, and at the beginning of the week even had a nice gap. However, this is a market that serves a lot of different functions. This shows that perhaps the world feels better about the situation in the European Union at the moment and they do the United Kingdom, but that could change in the blink of an eye.
Don’t want to trade this pair? Then use it as a tertiary indicator.
One of the things that Forex traders tend to forget is that nothing actually happens in a vacuum when it comes to currency trading. This pair is a perfect example of that and I use it as a tertiary indicator all the time. So for example, let’s say that the US dollar is losing strength during the day. If this pair is going higher, that means that the Euro is stronger than the Pound. If that’s the case, then it stands to reason that you want to buy the EUR/USD pair, as opposed to the GBP/USD pair. It’s not that the GBP/USD pair goes higher, it’s just that it won’t go as high as rapidly as the EUR/USD pair will. In other words, you have to find the strength and possibly the weakness of these 2 currencies and then match up against the us dollar. It’s a process I call triangulation.
All things being equal though, I believe that this pair will probably continue to go higher but a pullback is probably needed. This pair tends to grind, see you have to be patient either way and as a result it is a market that unfortunately most new traders ignore. Keep in mind that the pip value is higher, so quite frankly it doesn’t need to move as much.
