EUR/GBP: a consolidation phase developing before 0.88 handle target

EUR/GBP has been supported along the 1hr 200 sma at 0.8606 after a drop from 0.8672.

EUR/GBP has been better bid from 0.8300 and the late July rally, out of the consolidation and sideways channel formed mid July. Brexit and UK data along with the BoE pulling out all of the stops recently have been weighing on the pound and the euro has been lifted in a fragile dollar environment that remains the status quo. However, CPI, retail price index and jobs in the UK were all better than expected and this has given sterling a lift from 1.2866 to 1.3171 highs so far. The FOMC minutes have also underpinned the weak tone in the US dollar which enables the euro to also find a bid and a phase of consolidation the cross could be expected. 

EUR/GBP levels

"The market has already reached the 61.8% retracement at .8710 of the move down from the 2008 peak and we suspect that we will see some consolidation here. The market stays immediately bid while above the 0.8402 near term support line," explained analysts at Commerzbank. "The intraday Elliot wave count is suggesting a 0.8575 retracement. Longer term the market remains on course for the 0.8815 February 2013 peak. Please note that we have various Elliott wave counts that suggest that the move will extend towards the 0.9250 area."