Euro falls against the British pound during the week

The EUR/GBP pair has initially tried to rally during the week but then broke down below the bottom of the overall consolidation area that we have been in for the last couple of years. I think that the market will continue to roll over a bit, and I think that there are a couple of psychological support levels that we should be paying attention to. The 0.86 level will be the first area of psychological support, followed by the 0.85 level which is of course a large, round, important number.

However, I see a lot of structural support closer to the 0.8350 level, so I believe that the sellers will continue to prevail. On a break below the bottom of the candle for the week, I would be short of this market with an understanding that the 0.87 level should now offer a bit of a “ceiling” going forward. I also recognize that there will be the occasional rally, but those should be shorting opportunities as well.

The market breaking above the 0.87 level would be bullish, but I think it’s not until you break above the 0.88 level that you can feel comfortable buying this market. Obviously, this is going to be an event driven marketplace, as the United Kingdom and the European Union have been negotiating the break out. That should continue to be one of the main drivers for this market, but the British pound certainly looks stronger than the Euro around the world.