EUR/GBP Forecast June 26, 2017, Technical Analysis

The EUR/GBP pair rallied during the day on Friday, reaching towards the 24-hour exponential moving average. There is a significant amount of interest in the 0.88 handle, so I would anticipate that there will probably be a reaction once we get there. However, I think that the longer-term uptrend continues to favor the EUR, mainly because there is so much uncertainty when it comes to the United Kingdom. There have been comments coming from some Bank of England members suggesting that perhaps interest rates will have to be raised quicker than anticipated, but it appears that the uncertainty is outweighing any signs of hawkishness coming out of the central bank currently. That doesn’t mean he can change, but the longer-term trend is to the upside, and I think that the markets probably going to go looking for the 0.90 level over the longer term.

Buying dips

I continue to think that buying dips will probably be the way to go, least until we see significant British pound strength across the board. This is probably due to the fact that the EUR is a bit of a safer bet than the British pound. Alternately, a problem could occur with the headlines coming across the newswire, which of course will cause significant amounts of volatility. After all, we are starting to enter the negotiation phase of the Brexit, and with this being the case, it’s likely that there will be a lot of noise smashing the market back and forth. Because of this, I think that you will probably have to trade the small positions, and then perhaps add to them as the market works in your favor. It’s difficult to imagine that the market is going to be easy to trade, but given enough time I think that the volatility will favor the upside.
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