EUR/GBP Forecast August 4, 2017, Technical Analysis

The EUR/GBP pair was very volatile during the trading session on Thursday, as we initially dipped towards the 0.89 handle, but found enough support underneath to turn around and shoot to the upside. This was due to the Bank of England suggesting that the next interest rate hike will be until 2018 at the earliest, which was later than most traders would have thought. I believe that now the 0.90 level underneath should be support, and a pullback to that area would be a nice buying opportunity. By now would be chasing the trade, because quite frankly we shot so quickly to the upside. If you are not long already, it is very difficult to get involved now.

Buying dips

I continue to buy dips in this market, and I believe that we are going to go looking towards the 0.92 handle above. Given enough time, the market should continue to find buyers, and I think that we could even break above the 0.92 level, which opens the door to parity over the longer term. This is a market that is going to be volatile and will be hostage to headlines coming out of the negotiations from the United Kingdom leaving the European Union, so volatility will pick up from time to time. I believe that given enough time, the market will break out to the upside and continue the move. This latest impulsive move shows just how strong the move could be over the longer term. I believe that if we can stay above the 0.89 handle, the market is much more likely to go higher than lower over the next several months. If we did breakdown below the 0.89 level, the 0.88 level would come into focus, but I think that’s very unlikely to happen now that this trading session has occurred.

EUR/GBP Video 04.8.17