EUR/GBP shoots higher after dovish Bank of England comments

The EUR/GBP pair has rallied rather extensively during the session on Thursday as the Bank of England held interest rates with a vote of 7 to 2, and even suggested a more dovish stand than recently thought. Because of this, it looks as if the market is ready to continue to go higher, but obviously we are a little bit overextended as we record this video. I look at this market as one that offers value on dips, especially after the trading session on Thursday. I believe that the market will probably try to go to the 0.89 level, and then eventually the 0.90 level.

The 0.8725 level underneath has offered support, but I would be a bit surprised if we revisited that area in the short term. Longer-term, we have been bullish, but sentiment has been shifting back and forth as we continue the negotiations between the European Union and the United Kingdom. That is a day by day situation, as words cross the news wires from various politicians mouths. However, I think that this market has just readjusted its expectations of interest rate hikes coming out of London, and therefore we could continue to see a bit of bullish pressure.

I think one of the fair assumptions about this pair is that it will continue to be choppy, but that’s nothing new for this market as the economies are so highly levered towards each other. This is much like the USD/CAD pair, as you have a couple of neighbors that trade so much that economic announcements out of both economies affect each other. I believe in buying, but I also believe that this still require short-term trades.