EURGBP 2017 Trade Set upEURGBP Fundamental Outlook
EURGBP could be one currency to keep an eye next year. For all the speculation that Brexit will hurt the UK, speculators could be proven wrong big time. There are a lot of worries in the Eurozone, with French/German/Dutch elections. This could potentially hurt the euro, while the UK seems to have gotten an ally from Trump. From a central bank perspective, inflation is likely to increase in the UK, thus prompting for rate hikes from the BoE, while the ECB is set to keep its easing bias for most of next year.
EURGBP Technical Outlook
We have two major potential head and shoulders pattern that is taking shape. The first (minor) H&S is likely to form the right shoulder near 0.88. Following which, the downside target is to 0.76 on a break below 0.83. This forms the potential evolving major neckline support. A bounce from here will see the right shoulder form near 0.83 (which will turn to resistance following the minor H&S breakout).
The right shoulder of the major H&S near 0.83 will potentially see a move to 0.76 with a break down here sending EURGBP down to 0.62 eventually.
Timeframe for this could be the next 12 - 18 months. So EURGBP trend is likely to be downside, making it a sell the rallies.
