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EUR/GBP: Sterling to weaken further

The euro spiked higher against the sterling on Tuesday with the bulls pushing the pair further up this morning. With the sterling having lost 5.3% against the USD and 6.8% against the EUR since the beginning of the year, it looks like the British pound faces a heavy event risk. At 0.8689 at the time of writing, key resistance level for the bulls to watch sits at 0.87. Once we break above that area, we could expect to see a re-test of the 0.90 level. Support is currently seen at 0.8645 and 0.8605. As long as we remain above 0.85 any move in the vicinity of that area could be seen as a good buying opportunity. Economic data starts to pick up again today, with the BoE minutes and UK January employment figures high lightening the calendar during European hours. Later in the day, eyes will be on US Housing Starts and US Producer Price Index.

Dafni Serdari
Market Analyst
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