Euro spikes against Sterling on Thursday

The EUR/GBP pair has slice through the 0.88 level like it wasn’t even there as it was announced that the United Kingdom is probably going to be leaving the customs union once they leave the European Union. At the end of the day, I think cooler heads are starting to prevail as they realize that it’s not a big deal. After the initial spike, driven by what I suspect would be algorithmic trading and computers reading headlines putting money to work. Ultimately, I think that the market will continue to see a lot of volatility, but I would anticipate that we will eventually break down below the 0.88 handle.

The volatility will only continue I believe, but ultimately once the dust settles I suspect that we are going to go back to a consolidated situation. The 0.8725 is support, and I think that once we break back down below the 0.88 handle, we will continue to see more of the same consolidation that had been such a major part of trading this market. We still have a lot of headlines just waiting to happen as the EU and UK flush things out. Because of this, I am very hesitant to put a lot of money to work, but I recognize that the move above the 0.88 level, if it holds, could put opportunity in our hands. If we can stay above that level, then I think that you can put a bit more money to work rather than in the consolidation area. If we do rally from here, the 0.89 level would be the target.