EUR/GBP Forecast October 20, 2017, Technical Analysis

The EUR/GBP pair went sideways initially on Thursday, but then rallied significantly. We are struggling just a bit underneath the 0.90 level, but that’s to be expected as it is a large, round, psychologically significant number, and has been structurally resistant in the past. If we can break above the level, the market should continue to go much higher, perhaps reaching to the 0.92 level, and then the 0.95 level. Longer-term, I still expect this market go towards the parity level, it makes a lot of sense if you think about it, as there is much more certainty when it comes to the European Union then there is the United Kingdom after the vote to leave. I think that given enough time, we should see traders look at pullbacks as potential value to take advantage of. On top of that, I think that the longer-term target is probably parity, but obviously that is going to take some time to get to.
The 0.8950 level should be supportive, and I think that as we pull back from here due to exhaustion, it’s only a matter of time before we continue to see buyers enter based upon value. I think that the volatility will continue, and of course there will be headline shocks coming out of the London and Brussels occasionally, but longer-term I think that the overall trend should continue, as we have seen it for several months to the upside, and the recent developments are only noise and what has been a longer-term trend. Ultimately, I believe that the markets are trying everything they can to get to the 30 level, so these opportunities should present themselves occasionally, that we can take advantage of and serve buying yet again. It’s not until we break down below the 0.88 level that I would consider selling.