EUR/GBP surges to 11-month high

<p>EUR/GBP broke out to a new 11-month high on Friday, surpassing October’s peak of 0.7491, to hit an intraday high well above 0.7500. This breakout […]</p>

EUR/GBP broke out to a new 11-month high on Friday, surpassing October’s peak of 0.7491, to hit an intraday high well above 0.7500. This breakout is the latest culmination of nearly two months of sharp advances from November’s lows around the 0.7000 psychological support level.

Earlier in the week, prior to Friday’s upside breakout, EUR/GBP had already broken above a major downtrend resistance line that extends back to the August 2013 high. That trend line breach occurred just a few days into the New Year as the pound continued to weaken against most other major currencies.

EUR/GBP Daily Chart

 

The current surge has prompted the pair’s 50-day moving average to rise once again towards a convergence with its key 200-day moving average, which could result in a bullish “golden cross” indication.

Although there may not be many fundamental reasons from a longer-term perspective for EUR/GBP to stage a full reversal of its longstanding downtrend, current bullish momentum could prompt a further upside correction in the short-term.

The next major upside target to continue the current short-term uptrend is at the 0.7600 resistance level, where EUR/GBP last traded around a year ago, in January of 2015. Further upside momentum above 0.7600 could reach up towards the 0.7750 resistance level. To the downside, any breakdown below 0.7300-area support should likely see a resumption of the entrenched bearish trend.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.