EUR to GBP Double Bottom Spells Potential Gains to 0.7274
Over the last few days, the euro to pound exchnage rate fell breaking through key technical levels but there are reasons to be positive on the outlook.
EUR/GBP is under pressure into the weekend after failing to extend the Thursday recovery.
However, brokerage Blackwell Global notes a recent double bottom, which could point towards a buoyant EUR/GBP pairing over coming days.
Blackwell Global Market Strategist, Steven Knight states, “The EURGBP’s price action has been largely constrained within a channel that has restricted its movements. Currently, the pair has retreated to touch the bottom of the channel at 0.7050, and it now looks ripe for a strong retracement.”
“In fact, the EUR/GBP has actually formed a double bottom that coincides with both the bottom of the channel, as well as an area of support at 0.7055. Subsequently, there is plenty of scope for a bullish retracement given the pairs current position and the fact that RSI has now climbed out of the oversold zone.”
“Determining the entry for a large structure is always difficult, however the current neckline of the double bottom actually coincides with the 23.6% Fibonacci retracement level at 0.7147. Subsequently any breach of this key level, on the upside, could signal a bullish leg in progress.”
“In the near term, the EUR/GBP will need to surmount resistance at 0.7147, 0.7223, and 0.7283 to confirm a move higher. Any subsequent breach of the double bottom’s neckline could see these key resistance levels coming quickly into play. Regardless of how this pattern plays out, any bounce or retracement from the supporting channel line is likely to provide plenty of trading opportunities in the coming days.”
Latest Pound/Euro Exchange Rates
  | Live: 1.1391▼ -0.13%12 Month Best:1.2162 |
*Your Bank's Retail Rate
| 1.1004 - 1.1049 |
**Independent Specialist | 1.1232 - 1.1277 Find out why this is a better rate |
* Bank rates according to latest IMTI data.
** RationalFX dealing desk quotation.
Eyes on the ECB and US As More Volatility May Be In Store for the EUR/GBP
November has been a month of continual pressure on the pair. The President of the European Central Bank, Mario Draghi, has been giving dovish hints about the bank’s Quantitative Easing (QE) policy, which is likely to be expanded.
The ECB president spoke to the European Parliament today, saying there were signs a major measure of inflation would take longer to return to targets and the bank would use “all instruments available” to boost the eurozone’s recovery.
Already, Draghi has stated that the bank will discuss more monetary easing in December. Analysts have taken Draghi’s comments on the consumer price measure as a hint that he will act aggressively and consider cutting interest rates, maybe in December. This will undoubtedly take its toll on the EUR, and by extension the EUR/GBP pair.
In addition to ECB woes, a close eye will be kept on the US Unemployment Claims figure to be released soon. This report is not directly related to the EUR/GBP pair but its impact on the US dollar can result in further volatility for the already embattled pair.
Presently, the EUR/GBP rate is converting at around 0.707.
