• The euro has gone back and forth against the British pound during the trading session on Thursday.
• As we continue to pay close attention to the 0.85 level.
• This is an area that, if you look at it from a longer term standpoint, has been massive support.

So, the fact that we bounced from here probably shouldn’t be a huge surprise. Nonetheless, I think this is a market that you need to pay close attention to, because if we do break down from here, it could end up being a major turn of events. This is an area, though, that has been very difficult to overcome. So therefore, I am probably on the upside, but also recognize that it is more or less a short term trade.

• 

It’s not something that you can hang on to, at least not until you have a real reason to believe that the euro is suddenly going to be that much stronger than the pound. There are whispers of a cut coming from the Bank of England. I didn’t buy it. But even if that were the case, the ECB is going to cut as well.

More of the Same Ahead

So, all things being equal, I think it’s all the same. Ultimately, it looks like the EUR/GBP market is trying to hang around between the 0.85 level and the 0.86 level. And therefore, I think we’re just simply consolidating. If we were to break down below 0.85, it could open up a move down to the 0.84 level. But again, I think it would take a certain amount of news momentum, something to come into the picture and really send this market reeling.

This is a market that by its very nature of course is very choppy. So, it should not be a surprise at all if we do just simply trade in this 100 pip range. Keep in mind that the pip value in this pair is much higher than the other ones, so you don’t need as big of a move to make a decent profit.

That’s something that you need to keep in mind when you are trading in this market. The 50 day EMA is near the 0.8570 level and dropping in the 200 day EMA is at the 0.86 resistance barrier. So, it does make a certain amount of sense that it would be difficult to break above either. And therefore, I think we just continue to go sideways.

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• GBP/USD fluctuates near 1.2700 after posting losses on Thursday.
• Disappointing UK data make it difficult for Pound Sterling to stage a rebound.
• Sellers could look to retain control if the pair fails to stabilize above 1.2700.

GBP/USD closed in negative territory on Thursday and snapped a four-day winning streak. After touching its lowest level in a week below 1.2680 in the early European session on Friday, the pair recovered to the 1.2700 area.

The UK’s Office for National Statistics (ONS) reported earlier in the day that Retail Sales declined 2.3% on a monthly basis in April. This reading followed the 0.2% decrease recorded in March and came in worse than the market expectation for a contraction of 0.4%. This disappointing data doesn’t allow Pound Sterling to gather strength against its rivals.

Later in the day, Durable Goods Orders figures for April will be featured in the US economic docket. These data, however, are unlikely to impact the US Dollar’s valuation as they are not expected to influence the Federal Reserve’s (Fed) rate outlook.

On Thursday, the data from the US showed that S&P Global Composite PMI rose to 54.4 in May’s flash estimate, highlighting that the business activity in the private sector expanded at its strongest pace in two years. The probability of the Fed leaving its policy rate unchanged climbed to nearly 50% after the PMI report, according to the CME FedWatch Tool, from 35% earlier in the week.

Investors could react to changes in risk perception heading into the weekend. Following the sharp decline seen in Wall Street’s main indexes on Thursday, US stock index futures trade modestly higher in the European session on Friday. A rebound in US stocks ahead of the weekend could limit the USD’s gains and help GBP/USD hold its ground.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 50, pointing to a lack of directional momentum. If GBP/USD fails to stabilize above 1.2700, 1.2660 (Fibonacci 61.8% retracement of the latest downtrend) could be seen as next support before the critical 1.2630 level, where the 200-day Simple Moving Average (SMA) and the lower limit of the ascending channel meet.

On the upside, immediate resistance aligns at 1.2720 (mid-point of the ascending channel) ahead of 1.2760 (Fibonacci 78.6% retracement) and 1.2800 (upper limit of the ascending channel).

 

• GBP/USD fluctuates near 1.2700 after posting losses on Thursday.
• Disappointing UK data make it difficult for Pound Sterling to stage a rebound.
• Sellers could look to retain control if the pair fails to stabilize above 1.2700.

GBP/USD closed in negative territory on Thursday and snapped a four-day winning streak. After touching its lowest level in a week below 1.2680 in the early European session on Friday, the pair recovered to the 1.2700 area.

The UK’s Office for National Statistics (ONS) reported earlier in the day that Retail Sales declined 2.3% on a monthly basis in April. This reading followed the 0.2% decrease recorded in March and came in worse than the market expectation for a contraction of 0.4%. This disappointing data doesn’t allow Pound Sterling to gather strength against its rivals.

Later in the day, Durable Goods Orders figures for April will be featured in the US economic docket. These data, however, are unlikely to impact the US Dollar’s valuation as they are not expected to influence the Federal Reserve’s (Fed) rate outlook.

On Thursday, the data from the US showed that S&P Global Composite PMI rose to 54.4 in May’s flash estimate, highlighting that the business activity in the private sector expanded at its strongest pace in two years. The probability of the Fed leaving its policy rate unchanged climbed to nearly 50% after the PMI report, according to the CME FedWatch Tool, from 35% earlier in the week.

Investors could react to changes in risk perception heading into the weekend. Following the sharp decline seen in Wall Street’s main indexes on Thursday, US stock index futures trade modestly higher in the European session on Friday. A rebound in US stocks ahead of the weekend could limit the USD’s gains and help GBP/USD hold its ground.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 50, pointing to a lack of directional momentum. If GBP/USD fails to stabilize above 1.2700, 1.2660 (Fibonacci 61.8% retracement of the latest downtrend) could be seen as next support before the critical 1.2630 level, where the 200-day Simple Moving Average (SMA) and the lower limit of the ascending channel meet.

On the upside, immediate resistance aligns at 1.2720 (mid-point of the ascending channel) ahead of 1.2760 (Fibonacci 78.6% retracement) and 1.2800 (upper limit of the ascending channel).

 

Softer inflation figures could dampen the market speculation about a June Bank of Japan interest rate cut. The Bank of Japan continues to focus on household spending and the services sector to fuel demand-driven inflation. In May, the Jibun Bank Services PMI fell from 54.3 to 53.6, suggesting no immediate rush for the Bank of Japan to raise interest rates.

Nevertheless, weakness in the Yen remains a concern for the Bank of Japan and the Japanese government. The weak Yen lifts import prices, impacting household spending, a focal point for the BoJ. Investors should monitor any BoJ or Japanese government views on the inflation figures.

US Economic Calendar: Durable Goods Orders, Consumer Sentiment, and the Fed

Later in the Friday session, durable goods orders and finalized Michigan Consumer Sentiment numbers will attract investor attention.

After better-than-expected US data on Thursday, upbeat stats could further reduce investor bets on a September Fed rate cut.

According to preliminary numbers, the Michigan Consumer Sentiment Index fell from 77.2 to 67.5 in May. Moreover, the Michigan Inflation Expectations Index rose from 3.2% to 3.5%.

Furthermore, economists forecast core durable goods orders to increase by 0.1% in April after rising by 0.2% in March.

• EUR/USD dropped further and approached 1.0800.
• The US Dollar gathered extra traction on firmer PMIs.
• The ECB might not reduce its interest rate in June.

The US Dollar (USD) extended its weekly recovery and kept EUR/USD under significant pressure on Thursday, pushing spot to new multi-session lows in the proximity of the 1.0800 neighbourhood.

The Dollar’s rebound aligned with robust data from preliminary US PMIs for the month of May and was also propped up by the strong performance in US yields across various durations, all amidst reignited speculation that the Federal Reserve (Fed) might keep its restrictive stance for longer than anticipated.

The above remained bolstered by the cautious tone from Fed policymakers, the solid health of the US economy, sticky inflation, and the still tight labour market.

According to the CME Group’s FedWatch Tool, there is nearly a 53% probability of lower interest rates by September (from over 60% on Wednesday).

Further support for the Fed’s current tight stance came from the FOMC Minutes of the May 1 meeting, which highlighted a debate about the restrictiveness of current monetary policy in light of the economy’s strength. This discussion is crucial, as the policy needs to be “sufficiently” restrictive to effectively curb inflation.

While the unchanged monetary policy landscape underscores the firm divergence between the Federal Reserve and other G10 central banks, particularly the European Central Bank (ECB), expectations of a rate cut by the latter diminished somewhat on Thursday after the ECB’s Negotiated Wage Growth increased by 4.69% in the January-March period, compared to 4.45% in the last quarter of 2023, reigniting caution ahead of a potential rate cut in June.

Looking ahead, the relatively subdued economic fundamentals in the Eurozone, coupled with the resilience of the US economy, support the ongoing narrative of Fed-ECB policy divergence and lean towards a stronger Dollar in the long run, especially considering the rising probability of the ECB reducing rates well before the Fed.

Given this perspective, the potential for further weakness in EUR/USD should be considered in the medium term.

EUR/USD daily chart

EUR/USD short-term technical outlook

On the downside, a break below the 200-day SMA of 1.0787 may prompt EUR/USD to revisit the May low of 1.0649 (May 1), followed by the 2024 bottom of 1.0601 (April 16) and the November 2023 low of 1.0516 (November 1). Once this zone is cleared, the pair may target the weekly low of 1.0495 (October 13, 2023), the 2023 low of 1.0448 (October 3), and the 1.0400 round milestone.

On the other hand, the pair is projected to find first resistance at the May high of 1.0894 (May 16), followed by the March top of 1.0981 (March 8) and the weekly peak of 1.0998 (January 11), all before reaching the critical 1.1000 level.

So far, the 4-hour chart shows a pick-up of the downward bias. That said, the 100-SMA awaits at 1.0797 prior to 1.0766 and the 200-SMA of 1.0748. The immediate up-barrier comes at 1.0861 ahead of 1.0884 and 1.0894. The relative strength index (RSI) decreased to about 38.

• EUR/USD dropped further and approached 1.0800.
• The US Dollar gathered extra traction on firmer PMIs.
• The ECB might not reduce its interest rate in June.

The US Dollar (USD) extended its weekly recovery and kept EUR/USD under significant pressure on Thursday, pushing spot to new multi-session lows in the proximity of the 1.0800 neighbourhood.

The Dollar’s rebound aligned with robust data from preliminary US PMIs for the month of May and was also propped up by the strong performance in US yields across various durations, all amidst reignited speculation that the Federal Reserve (Fed) might keep its restrictive stance for longer than anticipated.

The above remained bolstered by the cautious tone from Fed policymakers, the solid health of the US economy, sticky inflation, and the still tight labour market.

According to the CME Group’s FedWatch Tool, there is nearly a 53% probability of lower interest rates by September (from over 60% on Wednesday).

Further support for the Fed’s current tight stance came from the FOMC Minutes of the May 1 meeting, which highlighted a debate about the restrictiveness of current monetary policy in light of the economy’s strength. This discussion is crucial, as the policy needs to be “sufficiently” restrictive to effectively curb inflation.

While the unchanged monetary policy landscape underscores the firm divergence between the Federal Reserve and other G10 central banks, particularly the European Central Bank (ECB), expectations of a rate cut by the latter diminished somewhat on Thursday after the ECB’s Negotiated Wage Growth increased by 4.69% in the January-March period, compared to 4.45% in the last quarter of 2023, reigniting caution ahead of a potential rate cut in June.

Looking ahead, the relatively subdued economic fundamentals in the Eurozone, coupled with the resilience of the US economy, support the ongoing narrative of Fed-ECB policy divergence and lean towards a stronger Dollar in the long run, especially considering the rising probability of the ECB reducing rates well before the Fed.

Given this perspective, the potential for further weakness in EUR/USD should be considered in the medium term.

EUR/USD daily chart

EUR/USD short-term technical outlook

On the downside, a break below the 200-day SMA of 1.0787 may prompt EUR/USD to revisit the May low of 1.0649 (May 1), followed by the 2024 bottom of 1.0601 (April 16) and the November 2023 low of 1.0516 (November 1). Once this zone is cleared, the pair may target the weekly low of 1.0495 (October 13, 2023), the 2023 low of 1.0448 (October 3), and the 1.0400 round milestone.

On the other hand, the pair is projected to find first resistance at the May high of 1.0894 (May 16), followed by the March top of 1.0981 (March 8) and the weekly peak of 1.0998 (January 11), all before reaching the critical 1.1000 level.

So far, the 4-hour chart shows a pick-up of the downward bias. That said, the 100-SMA awaits at 1.0797 prior to 1.0766 and the 200-SMA of 1.0748. The immediate up-barrier comes at 1.0861 ahead of 1.0884 and 1.0894. The relative strength index (RSI) decreased to about 38.

The EUR/GBP pair drifted lower during the day on Wednesday, but did see a bit of volatility to the upside later in the day. It looks as if the market is ready to test the 0.88 handle, which is an area that should be resistive. After all, it was significant structural support for quite a while, and now I think it’s very important to watch the market in this area as it could give us a signal as to where to go next. I think at this point I would expect exhaustion, as we have seen a significant break down, but I also recognize that we could break higher, and if we do clear the 0.8825 handle, at that point I think it would prove itself to be supportive again. Overall, I think that there’s a lot of questions when it comes to this pair, mainly because of the recent decision for the United Kingdom to leave the European Union. That has this market looking at a lot of various headlines, and therefore a bit of a headache for traders.

If we rally, I think the market probably reaches back towards the 0.90 level above, which is the top of the recent consolidation area. However, I also recognize that a breakdown and falling from the 0.88 level could send this market down to the 0.86 handle. Either way, this is a market that is going to be very volatile, as it typically is anyway. The market continues to be one that you should be able to play, but you should play with small positions and then add when things go in your favor. That’s probably the only way you’re going to be able to tolerate the noise. Ultimately, this is a noisy market that could favor short-term trading.

EUR/GBP Video 02.11.17

This article was originally posted on FX Empire

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Most Read: Gold, EUR/USD, USD/JPY – Price Action Analysis & Technical Outlook

In the dynamic world of trading, it’s tempting to follow the masses, buying in bullish cycles, and selling during bearish phases. However, seasoned traders know that substantial opportunities often arise from unconventional strategies. One such strategy involves moving against the dominant market view, which can sometimes lead to favorable outcomes.

Contrarian trading isn’t about opposing the crowd for the sake of it. Instead, it’s about recognizing moments when the majority might be wrong and seizing those opportunities. Tools like IG client sentiment provide valuable insights into the overall market mood, highlighting periods of extreme optimism or pessimism that could indicate an upcoming reversal.

Yet, relying solely on contrarian signals doesn’t guarantee success. Their true value emerges when integrated into a comprehensive trading strategy that combines both technical and fundamental analysis. By merging these perspectives, traders can uncover deeper market dynamics often missed by those who follow the majority.

To illustrate this concept, let’s examine IG client sentiment data and what current retail segment positioning indicates for three key Japanese yen FX pairs: USD/JPY, EUR/JPY, and GBP/JPY. Analyzing these examples shows how contrarian thinking can help uncover attractive trading opportunities and navigate market complexities.

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USD/JPY FORECAST – MARKET SENTIMENT

IG data reveals a prevailing bearish sentiment on USD/JPY, with 73.65% of clients holding net-short positions, resulting in a significant short-to-long ratio of 2.80 to 1. The tally of sellers has remained relatively stable since yesterday, but has increased by 4.57% over the past week. Meanwhile, bullish traders have fallen by 5.36% since the previous session and are down 14.21% compared to last week.

Our trading strategy often adopts a contrarian perspective, finding opportunities where the majority disagrees. That said, the widespread pessimism on USD/JPY suggests the potential for further price appreciation in the near future. The persistent net-short positioning over key timeframes reinforces the positive outlook for USD/JPY.

Key Insight: Sentiment data indicates a strong contrarian bullish signal for USD/JPY. However, it is crucial to incorporate both technical and fundamental analysis into your trading strategy to fully understand the pair’s potential direction.

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Change in	Longs	Shorts	OI
Daily	-12%	-1%	-3%
Weekly	6%	6%	6%

What does it mean for price action?

Get My Guide

EUR/JPY FORECAST – MARKET SENTIMENT

IG data paints a picture of widespread bearish sentiment towards EUR/JPY, with 78.83% of traders selling the pair (short-to-long ratio of 3.72 to 1). This typically signals potential upside from a contrarian perspective. However, the picture is more nuanced than it seems.

While the overall mood remains bearish, there’s been a slight easing in net-short bets compared to yesterday (down 2.05%). On the other hand, the number of sellers has risen compared to last week, with net-short positions increasing by 7.43%.

This creates a mixed contrarian signal. While the overall bearishness hints at possible further gains for EUR/JPY, the recent fluctuations in positioning raise questions about the strength of this contrarian outlook.

Key Insight: The current market sentiment for EUR/JPY presents a complex picture. While a contrarian view suggests potential upside, the recent shifts in positioning warrant caution. A comprehensive approach, integrating technical and fundamental analysis with sentiment data, is crucial for making informed trading decisions.

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GBP/JPY FORECAST – MARKET SENTIMENT

IG client data reveals a pronounced bearish bias towards GBP/JPY, with 73.82% of traders holding short positions (short-to-long ratio of 2.82 to 1). This pessimism has grown in recent days, with a noticeable increase in short positions compared to both yesterday (up 8.75%) and last week (up 22.37%).

Our trading strategy often leverages a contrarian perspective. This widespread negativity towards GBP/JPY, along with the surge in bearish wagers, hints at the possibility of continued upward momentum for the pair in the near term. The persistent bearishness further reinforces this bullish contrarian outlook.

Key Insight: The current IG client sentiment data points to a strong contrarian bullish signal for GBP/JPY. However, remember that a comprehensive trading strategy should also incorporate technical and fundamental analysis to gain a full picture of the pair’s potential path.

EUR/USD Current price: 1.0849

• Economic growth in the Eurozone picked up in May, according to HBOC.
• Stock markets shrugged of the negative mood after NVIDIA results.
• EUR/USD trimmed FOMC-inspired losses and trades neutral around 1.0850.

The EUR/USD pair fell to 1.0811 early on Thursday as the US Dollar gained momentum following the release of the Federal Open Market Committee (FOMC) Meeting Minutes. The document showed that Federal Reserve (Fed) officials still believed price pressures would ease but expressed concerns about the lack of progress towards their goal of 2%. Furthermore, “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” On a positive note, officials considered growth remains solid, allowing them to keep interest rates in restrictive territory.

As a result, markets turned risk-averse. Stocks fell, with Wall Street closing in the red. The release of NVIDIA Q1 results partially offset the dismal mood, as the AI company reported upbeat sales and earnings that topped outrageously optimistic estimates. Asian shares traded mixed, while most European indexes trade in the green ahead of the American opening.

European figures helped EUR/USD recover from such a low following the release of the May flash Hamburg Commercial Bank (HCOB) Purchasing Managers Indexes (PMIs). German business activity rose for a second consecutive month and at a faster rate, according to the official report. The Eurozone economic recovery also gathered momentum in May, while rates of inflation of both input costs and output prices softened from April. The EU Composite PMI hit 52.3, its highest in twelve months, while the German index printed at 52.2, which was also a one-year peak.

The United States (US) published Initial Jobless Claims for the week ended May 17. which declined to 215K from the previous 223K, better than the 220K anticipated by market participants. S&P Global will release the preliminary estimates of the US PMIs after Wall Street’s opening, while the EU will unveil May Consumer Confidence.

EUR/USD short-term technical outlook

The EUR/USD pair returned to its comfort zone around 1.0850, and technical readings in the daily chart suggest sellers have no power around the pair. It bounced for a second consecutive day from around a mildly bearish 100 SMA, providing dynamic support at 1.0815. At the same time, the 20 SMA is aiming to cross above the 200 SMA, both converging around 1.0780. Meanwhile, technical indicators pared their corrective slides within positive levels and are trying to resume their advances, in line with dominant buying interest.

In the near term, according to the 4-hour chart, EUR/USD is battling to overcome a bearish 20 SMA but holding well above bullish longer ones. Finally, technical indicators advance, but within negative levels, not enough to confirm a bullish continuation in the upcoming hours.

Support levels: 1.0815 1.0780 1.0720

Resistance levels: 1.0880 1.0920 1.0960

EUR/USD Current price: 1.0849

• Economic growth in the Eurozone picked up in May, according to HBOC.
• Stock markets shrugged of the negative mood after NVIDIA results.
• EUR/USD trimmed FOMC-inspired losses and trades neutral around 1.0850.

The EUR/USD pair fell to 1.0811 early on Thursday as the US Dollar gained momentum following the release of the Federal Open Market Committee (FOMC) Meeting Minutes. The document showed that Federal Reserve (Fed) officials still believed price pressures would ease but expressed concerns about the lack of progress towards their goal of 2%. Furthermore, “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” On a positive note, officials considered growth remains solid, allowing them to keep interest rates in restrictive territory.

As a result, markets turned risk-averse. Stocks fell, with Wall Street closing in the red. The release of NVIDIA Q1 results partially offset the dismal mood, as the AI company reported upbeat sales and earnings that topped outrageously optimistic estimates. Asian shares traded mixed, while most European indexes trade in the green ahead of the American opening.

European figures helped EUR/USD recover from such a low following the release of the May flash Hamburg Commercial Bank (HCOB) Purchasing Managers Indexes (PMIs). German business activity rose for a second consecutive month and at a faster rate, according to the official report. The Eurozone economic recovery also gathered momentum in May, while rates of inflation of both input costs and output prices softened from April. The EU Composite PMI hit 52.3, its highest in twelve months, while the German index printed at 52.2, which was also a one-year peak.

The United States (US) published Initial Jobless Claims for the week ended May 17. which declined to 215K from the previous 223K, better than the 220K anticipated by market participants. S&P Global will release the preliminary estimates of the US PMIs after Wall Street’s opening, while the EU will unveil May Consumer Confidence.

EUR/USD short-term technical outlook

The EUR/USD pair returned to its comfort zone around 1.0850, and technical readings in the daily chart suggest sellers have no power around the pair. It bounced for a second consecutive day from around a mildly bearish 100 SMA, providing dynamic support at 1.0815. At the same time, the 20 SMA is aiming to cross above the 200 SMA, both converging around 1.0780. Meanwhile, technical indicators pared their corrective slides within positive levels and are trying to resume their advances, in line with dominant buying interest.

In the near term, according to the 4-hour chart, EUR/USD is battling to overcome a bearish 20 SMA but holding well above bullish longer ones. Finally, technical indicators advance, but within negative levels, not enough to confirm a bullish continuation in the upcoming hours.

Support levels: 1.0815 1.0780 1.0720

Resistance levels: 1.0880 1.0920 1.0960

• The British pound has rallied again during the trading session on Wednesday to reach the ¥199 level.
• The ¥199 level of course is a nice level II grab a headline or 2, but the reality is that the ¥200 level is what most traders are going to be paying attention to.
• This is mainly due to the fact that it was roughly where the Bank of Japan intervened again, and this of course had a major influence on action over the next several days.

Underneath, I think there are plenty of support levels people will be looking toward in order to find a little bit of value. I think at this point in time, the 50-Day EMA is important to pay close attention to, where it is currently sitting at the ¥193.50 level. The ¥195 level is an area where a lot of traders might be interested in picking up a bit of “cheap British pound” as well, but we will have to wait and see whether or not we even get that pullback.

• 

On the other hand, if we were to break above the ¥200 level, I think this opens up another leg higher, perhaps rushing in a lot of “FOMO trading” for traders to take advantage of. I don’t have any interest in shorting this market, because quite frankly it is far too strong, and of course the Japanese are stuck with their current monetary policy, and therefore I think you need to be very cautious with the idea of shorting this market, and it is worth noting that recently I’ve seen some well-respected pundits talking about shorting all of the yen related pairs, due to the fact that the Bank of Japan most certainly would have to change monetary policy. They have course, forgot to take into account that the massive debt find in Japan simply cannot be paid off with any type of interest at all.

Hanging On

At this point in time, I am hanging onto this pair regardless of what happens in the short term, just simply because I do get paid at the end of every day, and I think it makes a lot of sense to continue to take advantage of that aspect of trading. The swap will remain positive for a long time, even if we see the Bank of England start to loosen monetary policy.

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• At this point it looks like the euro is testing a major support level against the British pound in the form of the 0.85 level.
• This is an area that has been important multiple times in the past.
• Going back what seems like a lifetime ago, basically two years though, and I think given enough time, we will continue to see this area be important.

As long as we can stay above the 0.85 level, I would suspect that it could end up being a bit of a buying opportunity, but I also recognize that it could be a very choppy and noisy market.

If we break down…

• 

If we were to break down below the 0.84 level, then I think it truly opens up the trap door, if you will, to the downside. On the other hand, if we can turn around and break above the 0.8550 level, then we could go looking to the 200 day EMA just underneath the 0.86 level. That would just be a simple rangebound sideways trade. This is typically how this pair moves anyways, so would not be a huge surprise.

More than anything else, you wouldn’t even need the market to change its overall attitude too much to benefit from that trade. EUR/GBP is a market that I think given enough time, we’ll have to make a bigger decision. So, we need to pay attention to all these levels if and when we finally break out of this range, then we could have a rather big move on our hands.

There is a lot of talk about the Bank of England possibly cutting rates, and the ECB is expected to do it. So, I think at this point in time, it does make a certain amount of sense that we continue to see a bit of a ceiling in this market, and I don’t think we take off to the upside very easily. But that doesn’t mean that we can’t just bounce back and forth.

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