Medium Term EUR/GBP Downtrend Resuming

The FX Specialist view - A medium term bear signal in the EUR/GBP cross was given in the first half of 2010, with subsequent recovery finding good technical resistance last October. Renewed weakness now looks like the resumption of the main downtrend.

• MONTHLY CHART Prior breaks of support signalled a medium term bear move was underway. Recovery from the 50% pullback level found clear resistance from the old triangle. Below the 0.8065 Jun-10 low next focus would be on potential 0.7783 61.8% support.
• DAILY CHART: The Dec bounce failed around the 0.8649 01-Nov low and close to the underside of the old bull channel. S/term support at the 76.4% pullback is not a surprise, but this should presently give way to open up a test of the Jun-10 low. Any near term bounce is not expected to be deep. We will look at lower targets in the FX Specialist Guide in due course.

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