EUR/GBP Forecast September 21, 2017, Technical Analysis

The EUR/GBP pair has dropped a bit, as the market seems intent on testing the 0.88 level. A breakdown below there would be a negative sign, and could send this market to much lower levels, the first of which in my opinion would be the 0.85 handle. Alternately, if we bounce from there, the market should continue to go higher, perhaps reaching the next significant level in the form of the 0.90 level above. A break above there would be a very bullish sign and a continuation of the overall uptrend. Remember, this market has been strong to the upside for some time, but it is also a market that is a very choppy due to the United Kingdom leaving the European Union and all the uncertainties that are ahead. Ultimately, this is a market that should continue to be choppy, but I think that paying attention to the 0.88 level underneath is going to be crucial. I think that the buyers will get involved in that area, but if they don’t, that’s a very negative sign and we will see an acceleration of the recent selling.
Headline driven
One thing that’s difficult about this pair is that it is so headline driven. What I mean by that is the headlines coming out of the negotiations between the European Union and the United Kingdom will continue to be the main drivers. The Bank of England has suggested that interest rate hikes could be coming sooner rather than later, so that does work in favor the British pound, but at the same time one would have to worry about the overall economic health of the United Kingdom once the separation happens. I think you’re going to continue to see a messy pair going forward, but as things stand right now – we are still in an uptrend.