Euro falls against Sterling again on Friday
Even though this pair is negative in general, I think that you also have to approach it from a consolidation standpoint. After all, it has not been moving rapidly in either direction, but it has been a bit of a grind lower more than anything else. This is because both economies are places where people are cautious about putting money to work, and of course monetary policy out of the European Union is about as clear as mud. That being the case, one thing that you should keep in mind is that recently members of the ECB suggested that they would continue to reinvest their bond purchases, which means further quantitative easing is very possible.
Contrast that with the British, who look very likely to raise interest rates at least once over the next year. That should favor the British pound overall, but we are in a longer-term uptrend at the same time, so I think we are fighting to figure out whether we can break that uptrend. Beyond that, we have the negotiations between the United Kingdom and the European Union which of course hover above expectations as well. Ultimately, I think that rallies are to be sold and perhaps using something like the stochastic oscillator to give you a bit of guidance might be the best route to take in this market. I would keep my position size small, as volatility could pick up on a few errant words coming out of the mouth of a politician.
EUR/GBP Video 28.05.18
This article was originally posted on FX Empire