EURGBP Inverse Head & Shoulders Forming

The recovery in EURGBP over recent weeks has seen price breaking out above the bearish channel and carving out a potential inverse head and shoulder pattern with the neckline running along the .8726 level. The retest of the .8591 level saw strong demand kicking in to create the right shoulder of the pattern and bulls will now be looking for a breakout higher. If the pair can break above the .8726 level this should open the way for a quick move up to the .8862 level next.

Key Data to Watch

With little in the way of tier one data for either the UK or the Eurozone, trading in the pair is likely to be impacted most by developments within the COVID environment. The UK has been leading in the Eurozone in vaccination numbers though given the slowing that has occurred in the UK over recent weeks there are risks that as the Eurozone vaccination drive gathers pace, the gap between the two economies could narrow lifting sentiment in EUR.

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