EUR/GBP Forecast October 3, 2017, Technical Analysis

The EUR/GBP pair rallied significantly during the Monday session, reaching towards the 0.8875 handle. We found enough resistance there to start showing signs of weakness, but I think any pullback at this point is going to be a buying opportunity. Quite frankly, the uptrend was being threatened but it looks as if the 0.88 level is going to hold. If we can stay above that level, I think we will eventually go looking towards the 0.90 level above, although it may take some time to get there. This pair tends to be rather choppy, and it of course is hostage to headlines coming out of the negotiations between the European Union and United Kingdom, so sudden volatility can appear.
I believe that eventually the uptrend continues, especially considering that the economy of the United Kingdom will be questioned. I think that in the short-term, it makes sense that the European Union continues to gain on the United Kingdom, and I think that it has been thought that this pair is going to go to parity for some time. That being said, we obviously have fluctuations, which we have seen as of late. I would of course change my mind if we continue to drop below the 0.87 level, but currently I don’t think that’s going to happen. If it does, then obviously you have to start thinking about 0.85 below, which is the next psychologically important number.
This pair tends to be rather choppy, and the recent action is in any different than what you would expect. Remember, the pip value is higher than other pairs, so you don’t need the type of moves in this market to make profits that you do in other ones. Short-term trading is probably best, but I think eventually the buyers will get their way.