EUR/GBP Forecast September 19, 2017, Technical Analysis

The EUR/GBP pair rallied a bit during the day on Monday, using the 0.88 level as support. This is a massive support level on the longer-term charts, and I think that we could see a bit of a bounce from here. At the same time, the British pound has run into a bit of a “brick wall” at the 1.36 level against the US dollar, which was the gap from when Great Britain voted to leave the European Union. Because of this, I think that we may need to pull back in the value of the British pound, giving this a chance to bounce from the perfect level. I believe that we will probably go to the 0.90 level, and I like buying dips going forward.
Having said that, if we were to break down below the 0.8775 level, then I think that this market could drop. Ultimately, we are in a longer-term uptrend, and I believe that should continue to be the case. We have seen a nice pull back, but the longer-term traders are more than willing to jump into this uptrend as far as I can see. I think that the 0.90 level might be a bit resistive, but it’s possible we break above there as well. This will be especially true if the pullback in the British pound against the US dollar lasts for some time. If we do break above the 0.90 level, we should then continue to go looking towards the 0.95 handle. The recent strength in the British pound is due to the Bank of England suggesting the interest rates will have to rise quicker than most people thought. However, the ECB looks likely to step away from quantitative easing as well, so we should continue to go higher.