EUR/GBP Forecast Today 05/11: Rallies Against GBP (Video)

(MENAFN- Daily Forex)

• The British pound the euro has rallied just a bit during the early hours on Monday as we continue to see this pair try to build some type of bottom.
• This is a market that I think continues to be very noisy but with all of that i think this is a situation where the 0.845 zero level has to be watched very closely.

If we were to break above there, then I think you've got a scenario where the market could test the 200-day EMA and then eventually the 0.8550 level. Short-term pullbacks are likely, and that does make quite a bit of sense considering that we have the Bank of England decision later this week on Thursday, and that causes a little bit of volatility.

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If the British do, of course, cut interest rates by 25 basis points as expected. I don't know what it does for this EUR/GBP pair because it's expected and that is something worth paying attention to. It'll probably be all about all the internals and the voting and all of that coming out of England for interest rates, but we'll see. Furthermore, there is a significant amount of resistance above and I think that comes into play as well.

The Resistance Above Worth Watching

After all, the 200 day EMA sits right around the 0.8470 level, and I think it does offer a significant barrier. Breaking above that would open up a bigger move to the 0.8550 level and could change the trend altogether. I suspect over the next couple of days this will be a very choppy and sideways pair, more than anything else but that's not that out of the ordinary for the Euro against the British pound. After all, this is a market that has been noisy most of the time, and as a result, I think you have a situation where volatility continues to be a major factor.

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