The EUR/GBP cross currency pair is getting stronger for already 6 weeks. Since November 12th, it broke a resistance line at 0.82. Before that, it was trading in a narrow range between 0.77 and 0.81.
Since November 12th, it has one direction: up. While the economic crisis weakened the US dollar against the all currencies, the pound didn’t make a correction. It stayed low, with the GBP/USD not able to settle above 1.50. It drifted there only for short periods.
This sharp change in this cross is mostly due the sorry state of the British economy, rather than strength of the Euro. All the last economic figures from the last months have been awful: unemployment, house prices, growth, etc. The British Economy has a gloomy outlook. Statements by Mervyn King also haven’t helped the pound.
In the last week of Forex trade that begins today, the Euro is bought, and EUR/USD went up to around 1.42. Also other currencies made gains against the dollar.
But not the British pound. The GBP/USD stayed at around 1.47, not making any move against the dollar.
The result is that EUR/GBP = 96.57 – the highest ever price for this cross pair. The chart shows a sharp line going up.
Parity, 1:1, might not necessarily be reached on a holiday week like this. New Years, celebrated in the middle of the week, send many Forex traders to holidays rather than to their computer screens.
But it looks that next week, EUR/GBP is imminent.