EUR/GBP has been fairly quiet over the last week or so. This pair is a “grinder”, and one of my favorite pairs to have new traders try and learn on. This is mainly because it moves so slowly most of the time. This is due to the fact that the two economies are so interconnected, and in this situation, bad news for one is bad news for the other quite often.
This is what we have at the moment. The UK is slowing down and the Bank of England is more than likely going to continue easing soon as the economy feels the effects of sending 40% of its exports into the European Union. The EU is of course sliding into recession, so buying British goods aren’t going to be much of a priority. This should continue to push and pull this pair in a seesaw battle for the foreseeable future.
The market can move quickly, and if and when it does – it will more than likely be Euro negative as there are so many bad headlines that are waiting to come out of that area at the moment. The Pound has been beaten up against most other currencies as well, so have said that it is hard to think that any massive Pound appreciation in this pair will be anything more than Euro weakness at this point. (Which of course is very possible.)
0.81 And hammers
The 0.81 level continues to be a place where price feels very comfortable. The last few sessions have produced multiple hammers, and this is almost always a good sign as it shows a complete unwillingness by the market to fall. This doesn’t mean that the trend has changed, just that the bounce is almost a foregone conclusion.
.png "EURGBP Daily 61112")
However, I don’t like buying this pair at the moment. I see far too many resistance areas above to get involved from the long side at this time. In fact, I am looking to fade any rallies as they reach 0.82 and show signs of weakness on the shorter time frames such as the 4 hours chart. With this in mind, I will be waiting.