British Pound Set To Overcome 1.40 Against Euro

By: Richard_Cox

For most of this year, the Pound has had mixed results depending on your frame of reference.  For example, against the US Dollar the Pound is hitting new lows as expectations for rising interest rates from the US Federal Reserve have supported the greenback.  For these reasons, it is largely unsurprising to see that the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP) is rallying as there have not been many stronger currencies during most periods of this year.

But when the British Pound (GBP) is valued in terms of the Euro, the opposite scenario has been present.  “Rallies in the GBP have been strong as most of the market remains focused on the systemic debt problems that still exist for many countries in the region,” said Michael Thompson, markets analyst at Teach Me Trading.  “These types of trends are likely to continue as long as there are still conversations relating to the possibility of a Greek exit from the monetary union.”  For these reasons, it makes sense to outline some of the most important support and resistance levels that can be used for establishing positions in the GBP/EUR.  This is one of the less commonly traded currency pairs that are present in the market but its elevated pip values offer some solid opportunities for gains when positions are set in the correct direction.  Here, we will outline some of those important support and resistance levels in the GBP/EUR.

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GBP/EUR - British Pound vs. Euro

Critical Resistance:   1.42

Critical Support:   1.34

Trading Stance:  More Rallies Expected

GBP/EUR Forex Strategy:  Prices are once again threatening the 1.40 but we do not see historical resistance until 1.42.  Long positions can use this as a parameter for profit targets after buying at 1.34 support.

Recent moves in the GBP/EUR have been explosive and we are now pressing on the psychological 1.40 mark once again.  Overall momentum is still clearly bullish so traders can use the support level at 1.34 as a strong buy zone to get back into the uptrend.  There is some danger for the stance as the MACD reading is now heading into negative territory, so if we do see a failure at 1.40 it would make more sense to stand on the sidelines until things stabilize.  If the MACD reading does turn back into positive territory then we can expect a strong test of resistance at 1.42.

By Richard Cox

© 2015 Richard Cox - All Rights Reserved

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