Pound Sterling looks ready to continue higher against the Euro suggest our latest studies on the pair.
- The Pound to Euro exchange rate is today at 1.1197
- The Euro to Pound Sterling exchange rate is today at 0.8937
GBP/EUR spiked down after the announcement of Donal Trump's election victory as a rise in risk aversion supported the Euro and weakened the Pound.
The pair soon recouped the early losses and now stands poised to continue higher, but a move above the current 1.1295 highs would be required to provide confirmation of a continuation up to the next target at 1.1400, just below the 50-day moving average at 1.1430.
The 50-day MA is likely to present a tough barrier to further advances since moving averages often provide solid resistance to prices.
The long flash crash bar in early October probably signalled exhaustion in the dominant downtrend and could be a sign that more upside is favoured.
Analyst Bill McNamara at brokerage Charles Stanley is bullish the pair.
“The UK currency has also been recovering relative to the euro and last week’s 2.9% gain strongly suggests that it found support at its multi-year lows (i.e. at 1.10 or so),” he said.
“Its latest price action has also lifted it back above its short-term downtrend and the chart is indicating that there is still room for further near-term upside – although it is unlikely that we have seen the last of the volatility,” added McNamara.
Markets are expected to remain relatively calm in anticipation of the result of the US presidential election due in the early hours of Wednesday the 9th November.
Whilst the result is expected to impact on Dollar pairs the most, the Euro may also rally if Trump wins due to its link to risk aversion.
From both a technical and fundamental perspective, therefore, a Clinton win seems to be the more likely outcome.