EUR/GBP Forecast – Euro Forming Double Top Vs British Pound?

EUR/GBP Forecast – Euro Forming Double Top Vs British Pound?

  • – The Euro jumped higher after testing an important support area at 0.8660 against the British Pound.
  • – The EUR/GBP pair is currently following a nice bullish trend line at 0.8725 on the hourly chart.
  • – Recently in the Euro Zone, the CPI for May 2017 released by the Eurostat posted an increase of 1.4% (YoY), less than the forecast of 1.5% (Preliminary).

 

Euro Zone CPI

Today in the Euro Zone, the Preliminary CPI for May 2017 was released by the Eurostat. The market was positioned for an increase of 1.5% in the CPI in May 2017 (Preliminary), compared with the same month a year ago.

 

However, the actual result was below the forecast, as the Euro Zone CPI increased 1.4%. On the other hand, the Core Euro Zone CPI came in at 1%, just as the market expected. The report stated that “energy is expected to have the highest annual rate in May (4.6%, compared with 7.6% in April), followed by food, alcohol & tobacco (1.5%, stable compared with April), services (1.3%, compared with 1.8% in April) and non-energy industrial goods (0.3%, stable compared with April).”

 

Overall, the EUR/GBP pair may find it difficult to hold gains above 0.8700, but the 0.8720 support holds the key in the near term.

 

EUR/GBP Technical Analysis

The Euro after testing the 0.8750 resistance once against the British Pound moved down sharply. However, the EUR/GBP pair managed to hold losses below the 0.8660 support and started recovering.

 

EUR/GBP Technical Analysis Euro British Pound

 

The pair moved up and broke the 0.8680 resistance along with the 100 hourly simple moving average. The upside move was such that the pair retested the 0.8750 resistance, which is once again acting as a barrier for further gains.

 

On the downside, the 23.6% Fib retracement level of the last wave from the 0.8655 low to 0.8754 high can be seen as a major support. It also coincides with a nice bullish trend line at 0.8725 on the hourly chart. As long as the pair is above the trend line support at 0.8720, there is a chance of a break of 0.8750. On the other hand, a break below 0.8700 could increase the chances of a double top pattern, which may take the EUR/GBP pair well below 0.8660.

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