How long has the Brexit saga been going on now? Forex traders are likely asking this question taking into consideration the past week’s trading results which saw a sudden spike of buying within the EUR/GBP. The British government essentially said they will march to the beat of their own drummer if necessary after yet another failed attempt to conclude an agreement with the European Union.
After a solid month of bearish trading in the EUR/GBP in which values touched a low of approximately 0.88650 on the 3rd of September, a bullish trend has emerged. Suffice it to say the trading of the forex pair is being affected by the rather stubborn rhetoric from Britain and Europe as they engage in a public disagreement.
The past week and half of trading within the EUR/GBP has seen resistance broken higher. And late last week the forex pair has essentially gone from lows of 0.90700 to highs of 0.92850, which for the EUR/GBP can be considered mammoth moves considering its tendency to trade in a rather quiet manner. Speculators caught off guard who were short the EUR/GBP and were not using stop losses are likely not in the best of moods as this week’s trading begins. Blame it on the Brexit, blame it on politicians, but at the end of the day it still comes down to perceived value and the EUR certainly found buyers emerge as confidence in the GBP took a hit.
In early trading this morning the EUR/GBP however has seen some selling development. The spike higher late last week may be interpreted as too abrupt a move. Speculators may believe the EUR/GBP is a solid selling opportunity if they also think that Britain and Europe will find a way to eventually lower the flames of their dispute regarding the mechanics of the Brexit to come.
Selling the EUR/GBP is a trade that may generate feelings of anxiety in many traders taking into consideration the spikes higher demonstrated last week. However, if a speculator can keep their emotions in check and practice good risk management using stop losses, it might be wise to assume some more selling of the EUR/GBP will develop near term as the forex pair retraces.
EUR/GBP Short Term Outlook:
Current Resistance: 0.92500
Current Support: 0.92300
High Target: 0.92600
Low Target: 0.92200
