- The euro has rallied again during the early hours on Wednesday against the British pound, as we continue to see the British pound suffer at the hands of volatility.
- All things being equal, this is a market that I think continues to see a lot of noise, but ultimately, we have to resolve whether or not this consolidation area can hold.
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Bank of England Interest Rate Decision
The Bank of England has an interest rate decision during the day on Thursday, that will obviously have a major influence on where we go next, at least potentially. With that being said, the market is likely to continue to see a lot of noisy behavior in the EUR/GBP pair, but at the end of the session on Thursday, we should have a bit more clarity.
It’s possible that we stay within the consolidation area, which is between the 0.85 level on the bottom and roughly the 0.8625 level on the top. It’ll be interesting to see how this plays out, and I am going to be very patient at this point before I put a lot of money to work, mainly due to the fact that we have seen a lot of noisy behavior as of late, and we will have to pay close attention to the idea of whether or not this area has been a bottoming process, or if it is going to be an area where we see a continuation.
In general, this is a market that I think continues to be noisy, as it typically is. However, it’s worth noting that the 0.85 level is a massive support level. That area is crucial from a longer-term standpoint, so it would not surprise me at all to see this market take off to the upside, but I also recognize that there are a lot of questions about what the Bank of England may have to say during the process.
The European Central Bank is expected to cut rates sooner rather than later, so traders will be paying close attention to what the Bank of England has the say, because if they look likely to wait a while, that could be what proposes market to go looking toward 0.8750 level, which is a major resistance barrier based on previous action.
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