EUR/GBP Forecast July 7, 2017, Technical Analysis

The EUR/GBP pair had a volatile session on Thursday, as we initially dropped towards the 0.750 level. There was support there yet again, and then we eventually broke above the 0.88 handle. This is a very bullish looking move, so the market should continue to go towards the 0.8850 level. That’s an area that should be resistive, so I think we could pull back from there but I think that the market is probably going to find a significant amount of support at the 0.88 handle. The market should continue to be volatile, as this is essentially the Ground Zero for the negotiations between the United Kingdom and the European Union. Headlines will continue to be an issue, and that means that we will continue to be concerned with the potential moves when it comes to this breakup. There will be a lot of attention paid to words being spouted across the wires, and quite frankly it’s likely that the pair will be volatile regardless of what happens.
Buying pullbacks?
I believe that the best way to trade this market is to buy pullbacks, as the market has certainly changed his attitude over the last several hours. Ultimately, I think we could probably go to the 0.90 level above. I have no interest in shorting this market, as I believe that the British pound carries far too much in the way of headline risk currently, and will more than likely be a market that is difficult to deal with. Ultimately, the market should continue to favor the upside after this type of move, but we also know that the pair is much more valuable per tick than other markets, so smaller positions will continue to be the best way to play this market.
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