The EUR/GBP pair rallied to kick off the trading week, as we reached towards the 0.8550 level. This, of course, is good for the euro, because it has been beaten down so viciously against both the pound and the dollar. The 0.85 level underneath continues to offer support as you would expect, as it is a large come around, a psychologically significant figure. It now looks as if we may try to grind towards the top of the range, which is the 0.8650 level.
The question now is which currency is going to lose this battle? Currently, it looks as if traders are willing to go back and forth and carve out a range bound situation, which is quite common for this pair. Obviously, though, we have to worry about the Brexit in headlines can move this market quite viciously at times. However, when a range like this forms it works until it doesn’t, which is about a scientific is you need to get with this.
Simply put, we will probably continue towards the 0.8650 level where sellers will come back into the marketplace. The alternate scenario is that we roll over from here, and then break down below the lows of the Monday session, which could unwind this market towards the 0.8450 level right away. After all, when you break a significant round figure such as 0.85, market participants tend to pile into the fray.
Keep in mind that this market will be highly sensitive to the Brexit negotiations and rumors, so money management is going to be crucial, but with this obvious support and resistance area right around the price action, it’s too good of an opportunity to not take advantage of, especially after the erratic open for the week that we have had due to US/China trade issues.