EUR/USD, GBP/USD and EUR/GBP Forecasts – British Pound Stronger than Others

EUR/USD Technical Analysis

The Euro initially rallied during the trading session on Friday, but gave back gains pretty quickly. And it looks to me like we are in the process of trying to at least attempt to top out. Keep in mind that next Wednesday has the interest rate decision coming out of the Federal Reserve, and that will be a major driver of what happens with the US dollar and, therefore, what happens here. We are basically right around in the middle of the range that we had been in between 1.14 and 1.18, and we are sitting just above the 50-day EMA. So pretty neutral here. I think that remains the case.

GBP/USD Technical Analysis

The British pound has rallied, and the British pound, of course, has seen a resurgence of strength with the latest budget. But we also have to keep in mind that it’s probably only a matter of time before the United Kingdom has to cut rates via the Bank of England. And in fact, they almost did last time. It was a very close count. And I suspect that British pound strength, although impressive as of late, is probably somewhat limited. We are starting to get to an area that has caused some issues in the past, and it might be worth noting that we had a shooting star form for the Thursday session right where we’re at now.

EUR/GBP Technical Analysis

The euro continues to drop against the British pound. And at this point in time, it looks like we are getting ready to really start to accelerate to the downside. If we can break down below the 0.87 level, then it opens up the possibility of a move down to the 200-day EMA, possibly even the 0.86 level. When you look at longer-term charts, where we peaked at 0.8850, it is fairly close to a major resistance barrier in the form of 0.89.

The fact that the British pound has shown a little bit of resurgence as of late, while the euro has been stagnant, makes this a fairly negative move. We’ll have to see if it has any follow-through, but right now, it certainly looks like it favors the downside, at least in the short term.

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