EUR/GBP Price Forecast January 22, 2018, Technical Analysis

The EUR/GBP pair bounced during the day on Friday, from the important 0.88 level underneath. The market looks likely to continue to see noise in this market, and of course support based upon the large, round, psychologically important number. I believe that the market should continue to be very noisy in general, but it should continue to look at the 0.89 level as “fair value”, as the longer-term consolidation has been bouncing between the 0.88 level on the bottom, and the 0.90 level above. This is a market that continues to be an area that the market trades in, at least until we get some type of clarity out of the negotiations between the European Union and the United Kingdom. Until then, it’s likely that the pair stays within these areas, because of the uncertainty.

Longer-term, I do favor the upside, simply because we were in an uptrend before the negotiations started, and more importantly, the consolidation. I believe that eventually we will break out above the 0.90 level and go looking towards the 0.93 level, but obviously there’s a lot of work to be done going forward, so these pullbacks will continue. I suspect that a simple range bound trading system is probably the best way to go, and therefore giving us an opportunity to profit in the short term. The market does tend to be very choppy overall, as the pip value is almost twice what other currency pairs are. If we were to break down below the 0.88 level, look for support at the 0.75 level.

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