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Euro Cross Pick 21/09/2010
Written by article default Tuesday, 21 September 2010 18:24
The recent rally in the EUR/GBP appears to have tapered off ahead of the 23.6% Fibonacci retracement of the 2008 high to the 2010 low around 0.8470-80, and there could be a short term correction in the days ahead as the daily RSI approaches overbought territory. The Bank of England is scheduled to release its policy meeting minutes tomorrow at 8:30 GMT, comments from the central bank is likely to spark increased volatility in the exchange rate, and I may look to trade the pair following the event. I continue to favor a bearish outlook for the euro-pound and will look for a clear break below the 100-Day SMA at 0.8344 if we see the BoE raise its economic assessment, with board member Andrew Sentance voting for another 25bp rate hike. However, an increased split within the MPC is likely to reinforce a bearish reaction in the British Pound, and I will stick to the sidelines if we get a mixed batch of commentary from the BoE.Click here to learn more about DailyFX.