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EUR/GBP fell rapidly during the previous five sessions as the Euro continues to be punished by the trading community. The 0.80 level has given way convincingly, and on Friday we saw fresh new lows. This does suggest that perhaps this pair will continue much lower. On the daily charts, there is a bearish flag that suggest a move down to 0.76 and we can see absolutely no reason to argue with that.
While the Bank of England just introduced further quantitative easing, the ECB has cut rates yet again. This is a situation where the Pound is simply not the Euro, and that's enough for the markets. A lot of money has to be leaving the European Union at the moment and heading towards the United Kingdom. In fact, it's a very little known fact that the sixth largest French city in the world is London, England. With over 400,000 French ex-pats in the city, it simply puts a punctuation mark on the fact that capital is leaving places like France.
With the infighting and bickering between such countries as Germany and Greece, and unhelpful comments out of places like Finland lately, most investors would feel much safer with capital being kept in places like the United Kingdom as opposed to Europe. After all, it appears that the United Kingdom may be going into a bit of a soft spell currently, but it's nothing compared to concerns of a collapse of the actual currency. Many traders are openly speculating that the European Union is about to either break up, or lose some members.
Technically speaking, this pair looks absolutely horrible. With the long and bearish candle for the week, there should be little doubt as to the acceleration of selling in this market now. A break of the bottom should lead to fresh new lows yet again, and would lead to further selling. As for us, we have been short of this market and will continue to be. In fact, we are relatively comfortable with waiting for that 0.76 target to be hit. As for buying, there is absolutely no way we would consider it at this point.