EUR/GBP Forecast May 29, 2017, Technical Analysis

The EUR/GBP pair rally during the day on Friday, as we are now approaching a downtrend line on the weekly chart. That’s a very bullish sign, and quite frankly it’ll be interesting to see how this plays out. The British pound has been sold off drastically due to election polling coming out of London, which suggests that the race is closer than originally thought. Markets hate indecision and uncertainty, and I believe that’s part of what’s going on with the British pound now. Because of this, I think that pullbacks will offer buying opportunities to short-term traders, and if we can break above the 0.750 level, the market should reach towards much higher levels, not the least of which will be the 0.88 handle which has been important on longer-term charts.
So now we have to question how the exit negotiations will be handled, especially if the election results are not necessarily a foregone conclusion. I think the markets will continue to favor the Euro, if nothing else just because we know what’s going on there as far as politics is concerned. As long as there is uncertainty in the United Kingdom, this pair will probably favor the upside longer term. Markets continue to be very volatile, and this pair does tend to chop around a lot anyway. With this being the case, I expect that there will be plenty of “buy on the dips” type of opportunity going forward, and don’t have any interest in selling this pair as it seems like the longer-term position is asserting itself, and that most traders simply are not willing to place a significant amount of money into the market trying to short it. So far, anybody who has done so has lost significant money.