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EUR/GBP – Does 8000 Mark the Top?
The past several weeks have been nothing but a disaster for pound longs as the currency continued to sink under the weight of warning from the BoE that the central bank is likely to keep the interest rate stationary for a considerable period of time. Today the pair came under further selling pressure when several big banks pushed back their forecasts for a rate hike to 2016. But this kind of analysis usually comes at the end rather the beginning of a run and that suggests that the selling reaction on cable may be overdone. Meanwhile the ECB is firmly committed to further accommodation and clearly wants to see euro trade lower. Than suggests that the recent jump to 8000 in EURGBP may have been its last hurrah as the pair is now likely to resume its downward trend.
The 8000 level in EUR/GBP represents a triple top and a lower triple top at that suggesting that the pair is now at the top of its range and will need to trade above the 8125 level in order to establish a new bullish bias. Meanwhile the downside target is the lower end of the range at 7800