EUR/GBP got absolutely pummeled on Friday as traders continue to show a real lack of faith in the European Union. The flow of money coming out of Europe and into the United Kingdom seems to be accelerating and the fact that the end of the year was here didn’t seem to keep traders from selling this pair. In fact, the Euro did poorly against almost everything in the markets.
The pair will run into support at the 0.83 handle again, but with the force of the move on Friday, it seems more than likely that the level will give way before it is all said and done. The British Pound could also be hit going forward, but the biggest thing it has going for it is that it isn’t the Euro. The Euro is absolutely the worst currency to own at the moment, with maybe the exception of the South African Rand.
The buying of this pair shouldn’t even be considered as the fundamentals in Europe will continue to dictate a lower value for the common currency, and this pair shouldn’t be an exception. The 0.85 level would have to be broken above on a daily close to prove to us that the pair can even be thought of as being able to be bought. It appears that the rout is on for the Euro.
Once the volume returns back to the Forex markets, we will more than likely see more selling of the Euro. The volume could very well be held off until after the Non-Farm Payroll numbers on Friday the 6th, which of course moves the markets. The sentiment is very bearish on the Euro, and the coming interest rate cuts will more than likely force the pair much lower over time.
The UK has a lot of financial exposure to the EU, so while this pair looks very weak, there is the possibility that the move will be very choppy as we fall. The trend is most certainly down now though, and the moves in the coming year are likely to only be a continuation of this.
EUR/GBP Forecast January 2, 2012, Technical Analysis
Originally posted here
