Weekly FX Review - 29 November

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The EUR/GBP pair was trading up above 0.92 in the summer of 2020 as the global markets started to post a solid recovery from the pandemic induced lows around 0.83

However, from these highs in the summer of 2020 price action slipped back towards this major support area of 0.83. From this last test of major support, a medium term move higher has been posted, with a rapid spike up towards 0.92 on the UK mini-budget concerns.

The retracement levels around this latest move are between 0.861 – 0.886, in white on enclosed chart, these have caught much of the price action in recent weeks. Although we have seen two attempted moves under the 61.8% support. Both finding buying interest around the 0.8578 area.

This is now major medium-term support. While this double bottom holds, we can see the buyers from the summer lows remaining relatively comfortable. if this was to break however we can expect a number of these recent buyers exiting positions comparable to the break lower seen in H1.

Recent comments from ECB’s chair Lagarde suggests that the central bank is quite prepared to stay aggressive on rates, hawkish comments that the BoE to date has failed to match. So current levels around the 61.8% support could appear attractive to buyers looking for a move back towards the 38.2% area up at 0.886 while this hawkish divergence remains.