EUR/GBP Price Forecast – Euro rallies against Pound on Tuesday

The EUR/GBP pair rallied significantly during the trading session on Tuesday, after bouncing from the 0.88 level. If we break above the 0.8850 level, the market should continue to go to the 0.89 level. I think that the 0.88 level underneath is massive support, extending down to the 0.8775 level. The market continues to be very noisy overall, as we continue to get headlines and whispers about what goes on with the negotiations between the European Union and the United Kingdom.

Beyond that, the United Kingdom has recently released some less than stellar economic figures, so it makes sense that we continue to go higher. Beyond that, I think that the market then is also reacting to the Italian situation calming down, which of course is good for the Euro itself. However, the question now remains as to how much longer this positive attitude continues? We have an ECB meeting tomorrow, and if they start talking about stepping away from quantitative easing, it’s likely that we could continue to go much higher. Short-term pullbacks continue to be buying opportunities, unless of course we break down below the 0.8750 level, then I think we could drop to the 0.87 handle. The one thing I think you can count on in this pair is a lot of volatility and you should remember that the value of each PIP is higher, so smaller positions are required.