Euro to Pound Exchange Rate: EUR Still has Fuel to Climb

The Euro's has been on the backfoot against Pound Sterling for the past three days now, but this is merely a pause in the currency's advance argue some.

• The Euro to Pound Rate Today: 0.8576
• Pound to Euro Rate Today: 1.1660

The Euro has fallen against the Pound having posted a fresh 2016 best on the 16th of August at 0.8724.

The decline has offered a brief period of relief for those holding Sterling and looking to buy Euros, but the question on their mind will of course be, "will it get even better?"

We have observed elsewhere that Sterling may have finally put the worst of the weakness sparked by the EU referendum behind it. It is important to note that no one is saying a spectacular recovery is due. 

So while the risks of a big move lower are greatly diminished, there are still risks that some loss of value will still occur.

The near-term cap on EUR/GBP's rise was foreseen at the time the 16th of August best was reached - we wrote that the EUR/GBP had reached its limit in mid-month having cited a number of technical studies which suggested as much.

However, we remain conscious that the cap may be temporary and have taken another look at the rate adopting the argument that fresh Euro strength could yet emerge.

Afterall, momentum does lie with the Euro; it has risen strongly against the Pound during the summer and trades above it's 20, 50 and 100 day moving averages.

In short, momentum is positive in the near, medium and long-term.

"EUR/GBP continues to consolidate below its 0.8724 current August high. We remain unable to rule out further slippage to the .8433 support line which is expected to hold. While trading above there, the market will remain bid," says Karen Jones, a technical strategist with Commerzbank in London.

Latest Pound/Euro Exchange Rates

	Live: 1.1446▲ + 0.03% 12 Month Best: 1.2162
*Your Bank's Retail Rate	1.1057 - 1.1103
**Independent Specialist	1.1286 - 1.1332 Find out why this is a better rate

* Bank rates according to latest IMTI data.

** RationalFX dealing desk quotation.

 

Euro Still has Fuel to Climb

Lloyds Bank’s Robin Wilkins believes technical conditions underlying the EUR/GBP continue to favour more Euro strength.

However, the current relief we are seeing could extend a little longer:

“The bull trend is still intact, but a number of studies suggest further range trading is likely for now, if not a deeper pullback towards more important support in the 0.85-0.8450 region.”

Nevertheless, Wilkins points out that there are no topping signs:

“We have no sign of a top developing as yet, with a move above the 0.87 region seeing little in the way of meaningful resistance till the 0.90-0.92 region."

Commerzbank’s Jones, forecasts that longer-term the market remains on course for the .8815 February 2013 peak.

"Please note that we have various Elliott wave counts that suggest that the move will extend towards the .9250 area," says Jones.

Jones now sees a move higher evolving, as the, “market remains on course for the 0.8815 February 2013 peak.”

We see the move up from the May lows as suggesting an Elliot Wave in the final stages of development.

Looked at through the lens of Elliot Wave analysis, the pair is probably finishing off its final wave 5 of the larger move which began at the May lows:

Scoping in further and it is possible the pair could be forming a sub-component wave (4) during its current gentle, sideways decline, within this final wave 5.

Once sub-wave (4) has completed it will probably move higher in a final sub-wave (5), which will complete the larger 5.

As such, our own forecast is for a break above 0.8693 to lead to a probable move up to the same level of the Monday highs at 0.8726.