Euro falls against British pound during session on Wednesday

The EUR/GBP pair initially trying to rally during the day on Wednesday but found enough resistance of the 0.8780 level to turn around and fall significantly. This may have been in reaction to the higher yields and the concerns of default that are out there about Italian bonds. I think that if we break down below the 0.8725 level, the market will probably unwind to the 0.87 handle, and then perhaps even the 0.86 level after that. Ultimately, I think that this pair will continue to be very noisy, as this market is driven by headlines due to the negotiations between the European Union and the United Kingdom, but of course we also have to worry about Italian bonds.

I think that the elections in Italy have people a bit nervous when it comes to the European Union, but ultimately the European Union could be a bit more stable than the United Kingdom. Because of this, I would not be surprised to see a sudden turn around, especially if we get some type of pro-European result in Italy, or at least a calming down of the bond markets. I believe that we will continue to be in the short-term trading type of mindset, so keep that in mind, and be very cautious about putting too much money to work in at one time. I think that 25 PIP increments continue to be where we go.

EUR/GBP Video 17.05.18