Looking at the pound on the crosses, EUR/GBP has seen a downtrend for much of 2005, falling from roughly the .7100 level to the 0.6800 area in early April.
“The pound is starting to get a little expensive against the Euro,” Callow says. “We are probably close to a point where there will be a little bit of a reversal.”
Callow thinks the .6950 area is a likely spot for EUR/GBP to gravitate toward in the short-term.
However, once a corrective move has occurred, potential for additional near-term selling in the EUR/GBP is possible.
“EUR/GBP is still essentially a EUR/USD trade,” Attrill says. “We would expect to see EUR/GBP below 0.6800 in the context of higher rates and continued short-term cyclical dollar strength.”
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