EUR/GBP Forecast July 12, 2017, Technical Analysis

The EUR/GBP pair initially fell on Tuesday, reaching down towards the 0.88 level. However, there is a significant amount of support in that general vicinity as it was previous resistance, and that being the case it makes sense that we bounce. However, after comments from Monetary Policy Committee member Broadbent, the trader started selling the British pound overall as he was a lot less hawkish than people had read comments coming out of other members. This might have been a little bit of an overreaction, but at the end of the day we are approaching the 0.89 level, an area that would cause a little bit of resistance, and I now believe that buying on the pullbacks will probably be the way to go, as the 0.90 level above is a longer-term resistance area, and an area that will attract a lot of attention.
Buying dips
I believe that buying dips will continue to be the best way to get involved in this market, and that being the case it’s likely that the market will look at dips as potential value, as they are starting to sell off the British pound hand over fist. However, the 1.28 level in the GBP/USD pair is massive support, so if we continue to find support in that area, this market might not go to the 0.90 level right away. On the other hand, if the British pound breaks down significantly against the US dollar, then this pair should show a very similar reaction in negative pressure when it comes to the British pound overall. Pay attention to both markets, they should influence each other going forward. I have no interest in selling this market, because of the massive impulsive move that we have seen during the day.