A critical inflection juncture for the EUR/GBP is in focus as the British Pound appears to be getting stronger and testing important support against the Euro.
The past five days of trading for the EUR/GBP have produced a bearish trend as the Pound has proven strong. Since late June the EUR/GBP has produced choppy results for speculative traders looking to take advantage of its range, but it should be kept in mind the value band for the Euro and Pound remains rather polite as the two major currencies perform in forex.
The past month of trading for the EUR/GBP has been mainly between 0.89400 and 0.91450. However, the past couple of days in trading have seen the 0.90000 juncture become the focus and it is certain traders are focusing on this mark as an inflection point as they try to gauge risk sentiment. In early trading this morning the EUR/GBP has traded below the 0.90000 level, which signals bearish momentum. The question now speculators must ponder is if the selling of the EUR/GBP can be sustained?
Important support for the EUR/GBP appears to be the 0.89650 level, but this mark has not been hit since the second week of July and traders may be hoping for too much if they are looking for the Pound to move quickly to those levels short term. However, there is a rationale for speculators who have their eyes set on more selling of the EUR/GBP to develop. This is because from early April until the middle of June the EUR/GBP traded largely between the marks of 0.86850 and 0.89900.
Coronavirus continues to be a thorn in the side of the UK government. It was announced over the weekend that a resurgence of hotspots have emerged. The UK government has begun to open its economy, but it has also been forced to admit its intended pace may have been too optimistic and a more cautious approach is needed. And purely technical traders may not want to hear anything about it, but the Bank of England will be conducting an important monetary policy meeting this week and will release its reports on Thursday which will likely affect short term sentiment.
The trading of the EUR/GBP is always an intriguing trade because it delivers plenty of technical charts and perceptions about the direction of the economies for Europe and the United Kingdom must be synthesized. The short term trend of the EUR/GBP has been bearish and if the forex pair can sustain its value below the 0.90000 mark, it may attract speculators who believe more selling will develop and a downward track can be pursued.
EUR/GBP Short Term Outlook:
Current Resistance: 0.90000
Current Support: 0.898000
High Target: 0.90500
Low Target: 0.89500