EUR/GBP – Approaching Major Long Term Support

EUR/GBP – Approaching Major Long Term Support

Fundamentals

The EUR/GBP is on the verge approaching lows it hasn’t seen since 2008. The reasons for the decline have been startlingly clear for many months. UK is on the verge of coming off the zero rate standard while the ECB is likely to compound their negative rate policy with additional QE increasing the gulf between the two monetary policies. Tonight’s EZ CPI could be key as to whether the ECB will actually take the plunge sooner rather than later. Another negative read which would suggest that deflation remains persistent could push the ECB policymakers over the edge and Mr. Draghi may announce new measures at this weeks presser. On the other hand any slghtly positive news could delay action and provide the EUR/GBP with a modicum of selling relief.

Technicals

The EUR/GBP pair now finds itself on the 7700’s as it approaches very long term support at the 7700 level that has not been seen since 2008. A break there would open a run to 7500 while only a retake of the 7900 figure alleviates the bearish bias.

Chart Of The Day

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