EUR/GBP Weekly Outlook

EUR/GBP Weekly Outlook

EUR/GBP dropped through 0.8446 support last week and remained weak. The development indicates that deeper correction is underway. Initial bias remains on the downside this week. Deeper decline could be seen to 50% retracement of 0.7755 to 0.8806 at 0.8281. On the downside, break of 0.8560 minor resistance is needed to confirm completion of fall from 0.8793. Otherwise, outlook stays mildly bearish.

In the bigger picture, medium term rebound from 0.7755 lost much momentum after hitting 0.8806 and the break of 0.8446 support raised the chance of reversal. But overall, we're still preferring the case that correction from 0.9799 has completed with three waves down to 0.7755 already and expect another rise to 0.9083 key resistance level. However, break of 0.8164 cluster support (61.8% retracement of 0.7755 to 0.8806 at 0.8156) will invalidate this view and turn medium term outlook bearish for 0.7755 low.

In the long term picture, no change in the bullish view that price actions from 0.9799 are merely a consolidation pattern and the up trend from 0.5680 is not finished yet. Indeed, such up trend is possibly resuming now. Break of 0.9083 key resistance should be a strong affirmation of the case and should at least send EUR/GBP for a test on parity.