By FXEmpire.com
The EUR/GBP pair has been falling for some time now, but managed a bit of a bounce on Friday. The pair is a contrast in expectations, as the Bank of England is now openly talking about a lack of need for easing, and a fear of inflation. The Europeans on the other hand, are worrying about the massive amount of debt that they are now printing Euros to pay for. In other words, this should be a bit of one-way trade overall.
The Euro should continue to suffer in comparison to the Pound, but it looks as if we are in for a bit of a bounce from these low levels. The 0.82 level has seen buyers come into the market in order to buy Euros, but the support is probably fleeting at best. The hammer on Thursday will have caught the eyes of technicians, but the cluster above at the 0.8250 area should bring out the bears. In fact, with the recent fall that we have seen – it is from that cluster that we would like to sell if given the chance.
The bounce more than likely will be somewhat short lived. However, the bounce will simply allow us to sell the Euro from higher levels. The United Kingdom will certainly be raising rates long before the European Union, and this should continue to drive this pair lower over time. The ability for the Bank of England to step in front of inflation will be very important, and there is a chance that the central bank may be a bit more aggressive than many expect in order to combat it.
The hammer from the Thursday session will certainly be a spot from which we could sell going forward as well. If the daily chart closes below it on a daily candle, this would show a real breakdown of the support, and this pair should then try to reach the 0.80 level as the market seems to be drawn towards it. The pair is a sell only one, so now we need to see if we are selling a rally, or we are selling a breakdown.
Click here to read EUR/GBP Technical Analysis.
Originally posted here
