- In my daily Euro/British pound forecast today, I see more sideways action, but I also recognize that we are in major inflection point.
- After all, there is massive support underneath near the 0.84 level that I think a lot of people will be paying attention to.
- You can see this clearly on the monthly chart, so it's definitely something that's going to attract longer term money.
On the upside, we have the 0.85 level, which has been massive resistance. We gapped down from there when they announced that there was going to be a snap election in the European Union parliamentary race in France and the local parliament as well. So really just a huge mess. I think at this point, there is a lot of concern and just hesitation to put a lot of money into play.
Resolution to the Upside? Maybe.
However, once things resolve themselves, I suspect that we probably see a return to the upside, at least for a while, not necessarily for a huge move, but for a move, nonetheless. If we can break above the 0.85 to zero level, then we have the possibility of more momentum coming into the market, perhaps sending the market to the 0.86 level. On the other hand, if we turn around and break down below the 0.84 level, that would be a massive negative sign, and at that point,
I'm not exactly sure what happens next, but it won't be good for the euro. EUR/GBP is a pair that's typically choppy under the best of circumstances, so I think that's essentially what's going to happen over the longer term. Whether or not we do it here or in one of the other ranges above remains to be seen, but right now I think this is probably best used as a gauge as to how to trade the euro or the British pound against other currencies. Right now, they seem to be fairly equal over the last two weeks but clearly the pound is stronger than the euro over the longer term.
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