Pound's Rally Running Out of Steam Warn Analysts; A Period of Consolidation Around 1.17 Lies Ahead

On Friday morning in London we see GBP has settled after a week of impressive gains.

The end of the Pound's rally against the Euro?

Leander Dreyer at Jyske Bank says the hefty losses witnessed in EUR/GBP could be coming to an end for the time being:

"EURGBP is about to reach a series of strong support levels in the range of 84.90-85.10. Now it will take some news to trigger a breakout to the downside.

"In the short term, EURGBP trades in oversold territory, and therefore we expect that in the short term EURGBP will trade back towards the level at 86.30-86.90.

"We recommend that investors place a sell order at 86.20 to catch EURGBP before the next weakening phase begins."

PMI data could shift the Euro next week

According to Richard Driver at Caxton FX some sideways movement expected until the EUR gets interesting again next week:

"After climbing to 1.1750 as a result of encouraging retail sales data, GBP momentum has slowed this morning ahead of eurozone CPI data due at 10a.m. With a quiet schedule for European data, it will be difficult for the EUR to regain strength and attention is turned towards next week when vital PMI data for France and Germany is released.

"Yesterday’s upwards trend in the GBP/EUR is likely to be put on hold today with sideways trading around the 1.17 level. The current rate is at 1.1717."

Euro Technical Support Looms

Reiterating today's theme of EUR-GBP consolidation is Luc Luyet at MIG Bank:

"EUR/GBP is approaching long-term trend line support from 0.7755 (23/07/2012 low). Scope is seen for a minor recovery from here, towards 0.8600 from where a resumption of weakness would be anticipated to retest the region close to the 200 day moving average, currently at 0.8453.

"Price action seen since the annual high at 0.8815 is deemed to be part and parcel of a larger corrective phase which may eventually retest under the 0.8398 (26/04/2013 low) region."