The price has managed to increase today after the last days impressive drop, the rate has fallen below an important confluence area, but remains to see if this I was a valid or a false breakout, the cable has started to decrease again on the short term, has fallen also versus the greenback because the United Kingdom economic figures have disappointed in the European session.

The EUR/GBP has lost altitude in the afternoon, even if the Euro-zone data have come in mixed, will be better to wait for a fresh new signal because right now we don’t have a trading opportunity. The Eurostat has published the Flash GDP report today, the indicator has remained steady at 0.3% growth in the third quarter, while the Trade Balance has increased from 23.4B to 24.9B, exceeding the 22.3B estimate, the trade surplus has come in better and has reached the highest level of the last 5-months, but has failed to maintain the Euro higher. The ZEW Economic Sentiment has increased from 12.3 to 15.8 points, beating the 14.3 estimate, has reached the highest level of the last 5-months.

The rate has come back to test the broken confluence area formed at the intersection of the upper median line (UML) of the ascending pitchfork with the 0.8625 level, the rate should drop much deeper if will stabilize below this confluence area. If if will below the mentioned levels, then will fall towards the 50% Fibonacci line (ascending dotted line). However, if the breakout will be invalidated, then the rate will start another leg higher on the short term, but this scenario is less likely because personally I’m expecting to see the rate much deeper because the sentiment has changed on the short term when has failed to reach the second upside warning line (Wl2).

I want also to remind you that the medium term outlook remains unchanged as long as the rate is trading somewhere above the median line (ML) of the ascending pitchfork, the pair is somehow expected to increase again after the current correction because has reversed on the long term.