EUR/GBP: Waiting For U.K. General Elections
Roni Stern | Apr 14, 2015 03:16AM ET
For about 20 Months we have watched the EUR/GBP pair preforms what seems like a free-fall without a parachute. The question asked by many people is has it ended Last month when it hit 0.70122 and formed a doji pattern candle with a long bottom shadow from both up and down?
Well, in the market, like in the market nothing is certain but there are a few technical and fundamental indications as to where the pair might go next.
Starting with the technical, the following chart is a monthly chart in which one can the EUR/GBP's history.
As we can see during the month of March the pair reached levels that were untouched since the end of 2007, a point which in that time was a strong resistance that was broken.
Following the global financial crisis in late 2008, however, the pound depreciated at one of the fastest rates in history. The Euro actually rose to above 0.80 against the pound in April 2008. A further decline occurred during the remainder of 2008, most dramatically on 29 December when the EUR/GBP hit an all-time high at 0.97779. Since that day the pair started steadily drop and range between the 0.90500 areas to 0.79675.
When it started to drop for the last time about 20 months ago it actually broke that support at 0.79675 and recently got to the level of 2007 – 0.70122.
On a weekly chart it looks like this;
At this point it feels like since the Quantitative Easing program has kicked in the Euro has hit the rock bottom when trading at the level mentioned earlier. But it seems as if with the UK general elections coming up a stronger EUR should be expected.
The United Kingdom general elections of 2015 to elect the 56th parliament of the United Kingdom will be held on the 7th of May, 2015. And it seems to be in full force at the moment, with the parties controversial about policies. David Cameron’s Tory Party have announced plan to reform Inheritance tax levels, with £1M now billed to be the taxable level.
Putting it all into consideration, it seems like 0.74074 could be a nice area to place your TP before the elections.
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