Hi dear colleagues!
In my market reviews, I usually look into such popular currency pairs as EUR/USD and GBP/USD. Today is the final trading day of January and the end of the trading week. I suggest that we discuss GBP/USD on Monday with the round-up of January and this trading week. Today, let's consider an interesting and one of the most important forex crosses. I mean the EUR/GBP pair. In fact, we haven't discussed it for long. Trading this currency pair, you should be aware that this forex cross is sensitive to the COVID-19 situation as well as monetary policies of the ECB and the Bank of England. Last but least, the quotes of EUR/GBP depend on the UK exit from the EU and further trade relations between the Kingdom and the EU authorities.
Weekly
I believe that the Bank of England's monetary policy is more accommodative than the one of the European regulator. Another remark is that the UK economy will take the brunt of the Kingdom's divorce with the EU. In this context, EUR/GBP is closing both the month and the week in the red. In other words, the pound sterling is holding the upper hand over the euro. As we see on a weekly chart, the currency pair is trading downwards. The brown line represents resistance passing through 0.9498 - 0.9216. At the same time, the bearish trend of EUR/GBP is subdued. It frequently happens that a currency pair is trapped in a narrow range awaiting important news or macroeconomic data. Once they are released, a pair escapes a trading range and follows a certain trajectory, albeit in a quiet manner. At present, EUR/GBP is trading sideways at 0.8915-0.8811with a trading range of nearly 100 pips.
Logically, we can assume that a further trajectory will depend on a direction which the pair will escape from the trading range. I reckon there is a stronger likelihood of the bearish prospects. I guess today the forex cross will go downwards from a weekly Ishimoku cloud and close the trading week below the indicator's lower border. Nevertheless, we will be able to judge whether the price will move downwards only after a true breakout of support at 0.8811 and fixation below the important technical and psychological level of 0.8800. On the grounds of the weekly chart, the bulls set a difficult task. They have to push the price above out of the Ishimoku cloud and afterwards attack on and break the Tenkan and the Kijun lines which are colored in red and blue. All in all, judging by the weekly chart, the bearish move seems more feasible. But let me remind you that we should first wait until 0.8811 is broken and then the price fixes below 0.8800 to make a conclusion.
Daily
According to the daily chart, it is clearly seen that the price meets strong resistance when trying to climb. The resistance is represented by the red Tenkan line. To cement the bullish sentiment on EUR/GBP, the buyers should break the Tenkan line. Afterwards, they will have to test the strong resistance zone of 0.8915-0.8925. Once the price fixes above 0.8925, this will reinforce the buying sentiment and perhaps will push the trading instrument towards higher levels with the nearest upward target seen at 0.9000 which is the round psychological level. Meanwhile, EUR/GBP is trading higher that seems to be an upward correction. From my viewpoint, a good trading idea for EUR/GBP would be selling the pair after the price climbs to 0.8867 and (or) the important level of 0.8900. I would recommend that you should refrain from buying the pair at least today. Once again, don't forget that today is an extraordinary day.
Good luck in trading!
