The EUR/GBP is trading in the red on the short term and could reach fresh new lows if will stabilize below the broken dynamic support. The Cable dominates the currency market and could reach new highs versus its counterparts.
The pair has finally managed to breakdown from an extended sideways movement. I’ve said in the last months that we may see a larger drop if the rate will escape from this range and if will stabilize in the seller’s territory.
The rate dropped today but is located much above the 0.8627 Friday’s low. It should move further down if will close below the mentioned low. However, you should know that the rate could come back higher to test and retest some broken support level and to confirm them as resistance before will drop further.
The United Kingdom Rightmove HPI rose by 0.4% in April, but less versus the 1.5% growth in the former reading period. The CB Leading Index will be released in the afternoon, but I don’t think that will have a significant impact. The Euro could be supported only by the German WPI, which is expected to increase by 0.4%.
The rate made an impressive breakdown below the 61.8% retracement level and now is located below the first warning line (WL1) of the major ascending pitchfork. The breakdown needs confirmation, so we may see the rate higher on the short term. It could try to test and retest the 61.8% as well before will move towards fresh new lows.
The next downside target will be at the fourth warning line (wl4) of the former descending pitchfork. I’ve said in the last weeks that the rate should reach this level after the last false breakout above the lower median line (LML) of the major red ascending pitchfork. The false breakout above the confluence formed between the LML with the 38.2% retracement level represented a strong bearish signal.