EUR/GBP is one of the most interesting Forex pairs at the moment as far as I am concerned. This is mainly because the Euro has been rallying so well against the US dollar, even though the fundamentals don't necessarily call for it. On the other side of that coin, the British pound has been doing very well and this move actually makes complete sense to me.
We look at the European Central Bank; it should be known that the central bank will sooner or later have to start easing its monetary policy. The European Union is set to go into recession, and they will need to stimulate growth somehow. On the other hand, the Bank of England has recently stated that it believes the monetary policy in that country is roughly where it needs to be. In other words, the bond yields should spread out quite a bit.
This of course will vary from country to country and Europe, but the truth is most investors look at German bonds as the benchmark. The gilts in Britain will match up quite well against those as the yield should continue to rise in relationship.
Shooting star
The candle for the Friday session of course is a shooting star and we all know that it is an extremely bearish signal. Below the current prices, I see the 0.79 level as a support area that needs to be overcome in order to push prices lower. However, I think it is only a matter of time before the European Union disappoints again. After all, it seems to be what they do.
The area above is massively resistive, and I see resistance all the way to the 0.81 level that should keep prices lower. I just don't have enough faith in the European Union or the currency itself in order to think that it is going to break through this resistance. However, they could and I would be more than willing to buy this pair if we get above the 0.81 handle. In the meantime, I think the path of least resistance is still lower.