EUR/GBP continues to test major support on Monday

The EUR/GBP pair continues to respect the 0.87 level underneath, which has been the bottom of the overall consolidation that we have seen for quite some time, and therefore it doesn’t surprise me that we bounced a bit. The market breaking above the 0.8725 level could send this pair higher, perhaps reaching towards the 0.88 level. Volatility will remain a major issue in this market, as the economies continue to negotiate the United Kingdom leaving the European Union. I suspect that the dips will continue to be bought, unless of course something fundamentally changes and there is some type of major announcement coming out of those negotiations.

I believe that short-term traders will continue to like trading this pair, because we have some very clear to find levels. The 0.8750 level above should be resistance, and I think that the market breaking above there could send this market much higher, perhaps to the 0.88 handle. Regardless, there is a lot of noise jumping into this market, and I think that using short-term trading tactics will continue to be preferred.

If we break down below the 0.87 level significantly, we could drop down to the 0.8650 level next, but that would more than likely need to coincide nicely with a major breakout in the GBP/USD pair, showing signs of strength in the British pound in general. Because of the volatility, you may wish to use a small position and then add as it works out for you.