Euro bounces significantly against the British pound

The EUR/GBP pair rallied significantly during the trading session on Wednesday, reaching as high as the 0.8750 level, before pulling back a bit and then rally again. However, I think that the longer-term proclivities still to the downside, as the Euro will have to deal with the noise coming out of the Euro zone itself and of course the problems in Italy. They are not over with, not by a longshot and I think that this more or less was a relief rally that needed to happen. This was a result of the EUR/USD pair coming towards the 1.15 level where there was a ton of order flow. Longer-term, I fully anticipate that we break down through the lows at the 0.7 level and continue to go towards the 0.86 level under there which of course is a structural support level on longer-term charts.

I think that eventually we will find that this market will return to the downward slope due to the fact that the Bank of England is likely to raise interest rates sometime soon, while the European Union will continue its quantitative easing program forever. After all, there are far too many financial cracks in the European Union to overcome in the short term, and I think it’s only a matter of time before the buyers get involved for Sterling in general when it comes to this currency pair.