The EUR/GBP pair gapped lower at the open on Monday, rallied a bit, filled the gap, and then rolled over. As I record this, we are starting to see the market rally again, as the British pound has been softening during the day. I think eventually, the market should reach towards the highs again, as we continue to see a lot of concerns when it comes to the British pound after leaving the European Union. I think that the market will eventually reach towards the 0.90 level, and then break above there to go to much higher levels. Short-term pullbacks continue to be buying opportunities, and then send this market towards the 0.92 handle above.
Given enough time, I think that this market goes to parity, it as it has been a bit of a self-fulfilling prophecy just waiting to happen. I think that the concerns extend well beyond the next couple of months, as although we aren’t sure when things happen, the reality is that the longer-term trend is to the upside as well. Because of this, I think that the buyers will continue to be attracted to the short-term dips, as they offer value in the EUR. After all, traders tend to prefer stability, and although the European Union has its own issues, the United Kingdom has a lot more to worry about in the short term, as we do not know how things are going to play out once the separation is done. Ultimately, the volatility should continue but I think that there is plenty of reason to think that most traders will take the “safe road” when it comes to trading this pair, as there are too many unknowns north of the English Channel. That being said, this pair does tend to be rather choppy.
EUR/GBP Video 10.10.17
This article was originally posted on FX Empire