EUR/GBP Price Forecast – Euro shows strength against Sterling again

The Euro rallied against the British pound during the trading session on Wednesday, reaching towards the 0.8825 handle, an area that has been resistance a couple of times now. The stochastic oscillator is in the overbought area, and it looks very likely that we could pullback in the short term. However, with the European Central Bank having a statement during the trading session today, it’s possible that we may get some clarity as far as quantitative easing is concerned.

The European Central Bank could signal that it’s stepping away from quantitative easing during the meeting, and that of course going to be very influential as to where we go next, driving the Euro higher. I believe that the market could have plenty of support underneath, especially near the 0.8775 handle, but if the ECB suggests that we are not going to see quantitative easing stepped away from, that would be very negative for the Euro, and could send this market right back down. It looks as if the Euro is continuing to strengthen, perhaps based upon the Italian situation calming down a bit, at least on the political front.

I believe that the risk of surprise is to the downside more than anything else, and I believe that the ECB failing to step away from quantitative easing could turn this market around very drastically, and with it extreme amount of force. I believe that rallies will probably be slow and steady more than anything else.