GBP/EUR: GBP/EUR Must Hold Ground Above 1.1806 For the Bulls to End the Recent Correction Lower

The pound to euro exchange rate is looking to arrest the bearish tone to recent trading sessions; early on Monday afternoon we see GBP/EUR quoted as being 0.22 pct higher at 1.1836. (Please see here about getting a bank-beating rate as close to this spot market quote as possible).

The euro to pound exchange rate is thus at 0.8448.

While the UK currency has moved higher today the rate is actually now 0.3 pct lower than it was a month ago, and well off the highs seen early last week when the currency breached 1.2 momentarily.

(Are you looking to secure these strong rates for a future FX transaction? Get in touch with an independent FX provider and talk about establishing a forward contract to protect against future declines.).

Euro strength: "We are looking for signs the correction is over"

Today, the UK and Eurozone eco calendars are empty and there is little that is likely to affect EUR/GBP trading.

"Attention will of course focus on Capitol Hill and in case of a deal, we would expect cable to correct further down, but following a hardening of positions of the main protagonists in the weekend, the prospect of a near term deal has diminished. For EUR/GBP a deal would probably not make too much difference. So, trading should be technical inspired today," says Leander Dreyer at KBC Markets.

Dreyer says he is looking for signs the correction is over:

"A break of EUR/GBP above 0.8470 (GBP/EUR @ 1.1806) might prolong the correction, as it paints a double bottom on the charts. However the 0.8450-to-0.85 looks appropriate to set a sell-the euro strategy."

Indeed, Gareth Berry at UBS says he is predicting the pound sterling to reassert itself over the shared currency:

"The recent recovery does not change the bearish trend and any further upside should find strong resistance at 0.8500. Support is at 0.8404 ahead of 0.8333."

However, Luc Luyet at MIG Bank is advocating for a resumption of Euro dominance over the UK currency:

"EUR/GBP has failed to decisively break its support at 0.8353 and is now rising towards the resistance area given by 0.8471 and the declining channel.

"A break of that area would favour a double-bottom formation, opening the way for further short-term strength towards 0.8589 (the implied target from the double-bottom).

"An initial support can be found at 0.8422 (04/10/2013 low). Another support stands at 0.8333 (01/10/2013 low).