Euro slips against British pound on Tuesday
The EUR/GBP pair has broken down significantly during the trading session, reaching down to the 0.8775 handle. We have bounce a bit since then, so I think that we could reach towards the previous consolidation area again. If we do, then I think the market will continue to reach towards the 0.8825 handle. Ultimately, if we were to break down below the 0.8775 handle, then I think the market probably goes down to the 0.8750 level. I think that ultimately this is a market that will be very noisy, as we continue the negotiations. However, I recognize that showing signs of stability in this area suggests that we could get a bit of a bounce. I believe this continues to be a very short-term driven market, based upon headlines more than anything else.
During the day on Tuesday, we saw a lot of US dollar strength, and that had a lot to do with where things went. Essentially, the Euro broke down a bit more than the British pound. That’s where we end up in this pair, a little bit lower. I think ultimately things will settle down and we will go back into the range, but if we do break down from here I think the 0.8750 level will begin a significant amount of support.
As I have been trading this market from a short-term perspective, I should point out that the stochastic oscillator is crossing in the oversold area, so that is another reason why think a bounce might be coming rather soon. However, I don’t think we get a massive move higher.