EURGBP- Price hesitation has set in after the cross failed to extend its corrective recovery on Tuesday. However, the cross continues to hold on to its recovery tone set from the 0.7761 level. As long as it can hold above the 0.7871 level, it is likely to return above the 0.7961 level. A breach will resume its correction towards its Jun 26’2012 low at 0.7982 level as the next upside target where a reversal of roles could occur and turn the cross lower. However, if this fails, expect further upside offensive towards the 0.8039/93 levels. We expect a back off lower at these levels but if broken, further upside pressure should build up towards the 0.8154 level. On the downside, the risk to its current upside will be a return to the 0.7787 level, its July 30’2012 low. A cut through here will turn focus to the 0.7700 level. Further down, support lies at the 0.7691 level, its Oct 2008 low. Below here could see the cross pushing further lower towards the 0.7594 level. All in all, the cross remains biased to the upside on further recovery risk.
