EUR/GBP Forecast May 2, 2016, Technical Analysis

The EUR/GBP pair has been grinding higher on Monday, as the gap is starting to form support. It looks as if the market is trying to go higher at this juncture, and perhaps reach towards the 0.85 level above. We could drop a bit from here though, as there is a significant amount of space left in the gap. Nonetheless, I believe that the market continues to be volatile as we have the talks between the European Union and the United Kingdom extending. Over the weekend, it has been a bit contentious, but in the end I believe that a deal will be done. After all, they don’t have much of a choice do they?
The 0.85 level above should be resistive, but if we can break above the 0.8530 level, the market could go much higher. There is a significant distance to get there, but the hourly chart looks as if we are trying to turn. This would be confirmed by a move above the 0.8460 level, that the trend is starting to go to the upside, at least in the intermediate charts. I believe that if we do fall from here, there should be a significant amount of support at the 0.8375 level below. This is a market that will continue to be very susceptible to headline risks, as the market will be focused on headlines coming from Teresa May, and her opposites across the English Channel. Because of this, if you are trading this pair you should be very quick to get out of a trade that’s losing money. Stop losses are an absolute necessity on all trays, but this is a market that could prove that theory rather quickly if you get the wrong headlines crossing the wires.
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