After falling to a low of nearly 0.84940 in yesterday’s trading, support proved durable and another leg upwards has been created. Before falling to Wednesday’s lows which occurred late in the day, the EUR/GBP currency cross was trading at a high of approximately 0.85410 before giving way to selling pressure. However in early price action this morning the EUR/GBP has risen again and a current value of 0.85180 is being tested. Trading conditions may prove to be fast within the EUR/GBP as technical inclinations spar with behavioral sentiment.
Race for U.K Prime Minister Set, but does it mean anything Short Term for the EUR/GBP?
The U.K will have its new Prime Minister it officially in the first week of September. Two conservative candidates were finalized yesterday, and now a series of debates and Tory party votes will take place over the next month plus - to determine the new leader. However, financial institutions have known about the process for Prime Minister for a while and Boris Johnson’s fate and his resignation have been in the cards for a while. In other words, financial institutions are not surprised.
The EUR/GBP has bounced Higher Since the 13th of July after Lows Were Established
On the 13th of July the EUR/GBP was trading at nearly 0.84015, with a rather strong move downwards, this low briefly tested depths seen around the 17th of May. The actual lows for the EUR/GBP in the past year occurred in early March and the middle of April this year, when the currency pair flirted with the 0.82500 ratio.
The middle of June saw a climb in the EUR/GBP to roughly 0.87200 before a move lower begun and tested the lows displayed on the 13th of July. However, it is likely not U.K politics playing the biggest factor in the EUR/USD currency pair, but a correlation with U.S interest rates from the Federal Reserve.
- Upwards momentum in the EUR/GBP has been rather strong, but sudden reversals lower have certainly occurred.
- Choppy conditions will likely remain a fixture in the EUR/GBP near term as traders digest U.S Federal Reserve interest rate policy outlook.
Speculators who want to wager on further upside being generated by the EUR/USD cannot be blamed. Support near the 0.85100 should be monitored short term, if this level holds traders may see it as a trigger to pursue additional moves higher for quick hitting profits. If the 0.84950 support level were to prove vulnerable again, near term trading may prove to be rather choppy. Risk management is needed and traders should be cautious today.
EUR/GBP Short-Term Outlook
Current Resistance: 0.85350
Current Support: 0.85100
High Target: 0.85610
Low Target: 0.84880
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