EUR/GBP Forecast December 21, 2012, Technical Analysis

The EUR/GBP pair attempted to rally through the 0.8150 handle on Thursday, but failed for the second day in a row. In fact, this is the second shooting star that we’ve seen in a row, and this means that the resistance is certainly daunting at this point time. It also suggests that we could fall from this area and head back towards the 0.8050 level and within consolidation. We think that the pair is more than likely consolidate, simply because the two currencies tend to act relatively similar to the USD/CAD pair, because of the same reasons: the two economies are so heavily interconnected. With that being said, on a break of the lows from the Wednesday session, we could see a move down about 75 pips or so. As far as buying is concerned, we would only do it if we managed to break above the highs from both Wednesday and Thursday.