Search ForexCrunch

Euro/pound fell below the 0.86 line and continues dropping. The relative strength of the British economy together with weakness in the euro-zone continues to weigh on the pair after it failed to conquer the 0.87 handle.

Since that attempt, the pair is clearly trading in a downtrend parallel channel. It still has a way to go on the downside, as the chart shows:

EUR GBP Downtrend Parallel Channel on the hourly chart July 22 2013

 

The recent strength of the pound came after the MPC Meeting Minutes showed that the decision not to announce new QE was unanimous. In addition, a big drop in jobless claims and a strong retail sales figure also supported sterling.

In the euro-zone, there are doubts about the economic strength of Germany and France, as other countries are are deep in a recession.

In the bigger picture, EUR/GBP was moving up (or GBP/EUR was going down) for quite a while, but this trend might have changed now. Here is a look at the daily chart:

EUR GBP Daily chart July 22 2013 Has the trend reversed for the currency pair

Further reading:  5 Most Predictable Currency Pairs – Q3 2013