Pound-to-Euro Exchange Rate Risks Breaking Below Key Trendline

 Exchange rates

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- GBP/EUR pulls back to key trendline

- Vulnerable to break lower and change of trend

- Upside capped by resistance from 200-day MA

Pound Sterling has pulled back to an important chart level against the Euro, where the short-term uptrend is at risk of breaking down.

The GBP/EUR exchange rate, which is currently trading at 1.1248, has corrected back to a key trendline for the move up since the August lows.

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Yesterday the exchange rate bounced after touching the trendline, but the move soon ran out of steam and the Pound retraced the gains. There is now a risk it might pierce below it, in time, ushering in a more bearish scenario for the pair.

A break below a confirmation level at 1.1189 would probably open the way for a move down to a target at 1.1080 at the level of the 50-day moving average (MA).

Large MAs often act as barriers to trending prices, hence why see it as an obvious target to any sell-off.

Such a move might also change the short-term trend from bullish to bearish.

Those readers looking to lock in current exchange rates for the purposes of international payments can achieve a rate of around 1.1180 with FCA-regulated independent currency specialists, while high-street bank accounts will typically be offering in the region of 1.0950-1.1050.


The outlook for Sterling is however difficult to call in the current febrile political atmosphere, and any positive developments that suggest Prime Minister Johnson's latest Brexit plans have a shot of success - as we highlighted yesterday - might see the pair continue rising within its bullish trend channel.

If this is the case, then a break above the 1.1300 level might provide the exchange rate with a bullish boost and confirmation for more upside, to a potential target at 1.1380 and the September 20 highs.

However, the exchange rate is likely to struggle to make those gains because of the location of the 200-day moving average (MA) presenting a barrier of resistance at 1.1327.

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