The EUR/GBP is near the 0.86340 mark as of this writing, this value is clearly within sight of important resistance which remains technically intriguing. The EUR/GBP currency pair traded near 0.86700 on Thursday and Friday of last week. Friday’s high water mark actually traded near the 0.86800 vicinity for a short while. While technical considerations and resistance are certainly going to factor into speculative consideration today, fundamentals need to be given attention too.
New U.K Prime Minister will be Announced Shortly
The EUR/GBP will be affected by the announcement of the new British Prime Minister quite shortly. Liz Truss is widely expected to be named the new leader early this afternoon, when the results within the ruling party are revealed. If Truss is not named the Prime Minister this could cause shock waves in the financial markets which have poised themselves for her leadership already.
When and if Truss does get the leadership position of the Tories and the U.K government, investors will wait for her to speak and this could also stir the souls of financial houses today. Thus, speculators of the EUR/GBP need to take into consideration the large potential for not only choppy trading to develop, but potentially fast market conditions. In the near term, there could be an additional reaction tomorrow as U.S financial houses return from their long holiday weekend also.
European Central Bank to have a dynamic role in the EUR/GBP this week too
The EUR/GBP will not only be affected by the outcome of the leadership vote for Prime Minister today, but waiting in the wings is the knowledge the ECB will conduct their interest rate announcement this coming Thursday. The ECB is notoriously lagging regarding its interest rate policy and only in the past couple of months has admitted it will have to be more hawkish. The question is how much of the interest rate hike to come has already been factored into the EUR/GBP. In other words a buy the rumor, sell the fact situation could prove itself later this week in the EUR/GBP.
- If support for the EUR/GBP begins to be challenged and falter near the 0.86300 to 0.86275 realms, this may be considered a bearish signal.
- Traders will need strong risk management today as the EUR/GBP reacts to news developing political leadership for Great Britain.
Speculators will have plenty of opportunity to wager today in the EUR/GBP, but they should be extremely careful. Conservative traders may want to wait for the Prime Minister’s leadership announcement and following speech before entering the market. Traders who dare to wager beforehand, may want to pursue selling positions if they believe the EUR/GBP is too high and will begin to challenge support levels in the short term.
EUR/GBP Short Term Outlook:
Current Resistance: 0.86560
Current Support: 0.86275
High Target: 0.86750
Low Target: 0.86090
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