EURGBP Looking Bullish
The EURGBP had many of us fooled. There were lots of calls out there for 0.80, 0.78, and even 0.75. The fundamentals seemed to deem it so with the euro caught in a death grip of sovereign debt woes and sterling enjoying deceivingly robust economic data in the 2Q and 3Q of last year. But January 2011 has certainly painted quite another picture.
The fundamentals have deteriorated for sterling. With last week’s disappointing retail sales print and today’s negative GDP number, the market is selling pounds. The techincals did hint this GBP weakness when price broke to the 0.8645 highs a little more than 3 weeks ago. However, with today’s bullish breakout above those highs, the EURGBP is now reacting to this new development in fundamentals. And as such, 0.9000 seems a much more likely target than 0.8000. Interim, bulls target the 0.8700 and 0.8800, the 61.8% and 76.4% Fibonacci retracement levels.
However, before bulls get too excited, remember that price never moves in a straight line. Plus, the euro is not exactly home-free either. So mind your levels and trade what you see.
