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EUR/GBP – Looking to Break 7800?
The EUR/GBP pair has been in downdraft for a while and the latest leg down may now break the key support level at 7800 especially if interest rate differentials continue to expand between UK and EU. Tomorrow the market will get to hear from Mario Draghi and he confirms that full blown QE is on the way then the euro is likely to fall to fresh lows and drag EUR/GBP down with it. On the other hand if there no promise of accommodation we may get a short covering squeeze rally that could pull the pair back towards the 8000 level.
Technically the EUR/GBP pair enjoys strong triple bottom support at the 7800 level and a break there opens a move towards 7500. A rejection could take the pair to the top of the range at 8000 but only a close above 8050 removes the bearish bias.