The currency pair increased in the morning, but the bears have stepped in again and have forced the rate to erase the morning gains. EUR/GBP is trading in the red, but seems undecided on the short term as the it moves sideways on the Daily chart.

Remains to see what will happen on the short term as the rate is driven by the fundamental factors, the Cable is somehow expected to increase as the United Kingdom data have impressed earlier, except one report. Technically, it was expected to increase in the short term after another false breakdown below an important static support.

The Euro stay strong even if the French Prelim Private Payrolls increased only by 0.2%, less versus the 0.3% estimate and because the Italian Industrial Production dropped by 1.3%, more versus the 0.3% estimate and after the 1.2% growth in the former reading period. The French Industrial Production rose by 0.6%, matching expectations.

Surprisingly or not, the Pound drops right now even if the UK’s Manufacturing Production rose by 0.7% in September, beating the 0.3% estimate and the 0.4% growth in the former reading period, while the Goods Trade Balance increased from -14.2 B to -11.3B, beating the -12.9B estimate. The Industrial Production surged by 0.7% in September, more versus the 0.3% estimate, only the Construction Output have dropped by 1.6%, more versus the 0.6% estimate.

Price failed to stabilize below the 50% retracement level and below the 100 Fibonacci level and now was somehow expected to increase in the upcoming period. The pair failed to reach and retest the third warning line (wl3), so the rebound is understandable.

The near term major downside target remains at the lower median line (LML) of the major red ascending pitchfork. A major drop will come only if the rate will take out this dynamic support. An important increase will be confirmed only after a valid breakout above the fourth warning line (wl4) of the descending pitchfork. Personally I believe that will take this out if will reach it.