EUR/GBP Consolidates Amid Middle East Uncertainty
The EUR/GBP pair has been in a quiet state on Tuesday against the Pound, with external factors dominating market movements. According to Christopher Lewis, a technical analyst and market commentator at DailyForex, this is due to uncertainty surrounding the Middle East and its impact on energy supplies.
Looking at the chart, Lewis notes that the 50-day EMA has offered resistance as of late, forming what appears to be a bullish flag. However, for this signal to be convincing, the pair must break above the 50-day EMA.
If the EUR/GBP were to drop below the 0.8525 level, Lewis suggests looking towards the 0.8450 level as a potential target. The interest rate situation remains uncertain, with the British Pound offering a higher yield than the Euro. This makes it difficult for the Europeans to hike rates, particularly considering the energy supply concerns.
In the short term, Lewis sees this as a consolidation area between 0.8540 and 0.8580 levels. He suggests patience in waiting for a daily close outside of this range before making any moves.