The EUR/GBP pair broke higher during the week, slicing through the 0.88 handle. However, we cannot break above the top of the shooting star from the previous week, so don’t feel that the market has broken out yet. If we break above the top of the range for the previous week, then I feel that this market will go looking for the 0.90 level above, which is a large, round, psychologically significant number as well as one that’s been important in the past.
The biggest problem with trading this market is that the European Union and the United Kingdom continue to argue about the divorce, and that will cause a lot of headline risk. Currently, looks as if the 0.8750 level is going to offer a bit of a floor, and it certainly looks as if the market is trying to build up pressure to the upside. Once it gives way, we should go much higher.
Headlines
Headlines course will be the biggest driver in this market, because quite frankly I don’t see many traders out there that I speak to paying much attention to the economic indicators. Because of this, I think that this is a bit of a “one-way bad” currently, but with a certain amount of trepidation. Because of this, do not expect impulsive moves, and the grind will probably continue in this market as a lot of fear will creep into any trade that is placed. If we did breakdown below the 0.87 handle, then I think we could drop towards the 0.3 but that seems very unlikely given the current look of this chart and the overwhelming negative response by bankers when it comes to the British leaving the European Union and all things involved.
EUR/GBP Video 10.7.17
This article was originally posted on FX Empire