EURGBP- Outlook for the cross has turned into a consolidation with downside bias following EURGBP’s price failure at 0.8794 level. There are two scenarios building up. One is a consolidation (now taking place) before a retest of the 0.8794 level is staged again and the other, is further weakness towards the 0.8690/87 levels. If the latter scenario plays out, we should see EURGBP targeting its Oct 07’2011 low at 0.8590 with a violation of there bringing the 0.8530/28 zone into focus. A breach will resume its medium weakness towards the 0.8460 level, its Mar’2011 low and subsequently the 0.8355 level, its Feb’2011 low. On the other hand, a decisive break and hold above the 0.8794 level will have to occur to prevent further downside weakness and then bringing further gains towards the 0.8881 level, its Aug 31’2011 high. We expect this level to pose a strong resistance and probably turn the cross back down but if broken, further strength should build up towards the 0.9083 level, its Jun 01’2011 high. Further out, resistance stands at the 0.9150 level, its Feb’2010 high. All in all, the cross remains vulnerable though consolidating.
