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Forex: EUR/GBP – testing 0.8450 support, this way, that a way, my oh my!

FXstreet.com (London) - EURGBP had taken out the falling trend line from April’s high 0.8638, after a double bottom on a decisive bullish move over the last two 24hr sessions in the market . However, this mornings action it is now looking as though it wants to take a dive below support again.

Breaking through 0.8450, marching up to the 0.8500 handle, it has found resistance there while we await news from the BoE, coming up at 11.00GMT. The market isn’t expecting much there, with no change being the consensus to either its asset purchasing programme nor deposit rates after a raft of healthier data of late. Industrial production and manufacturing will arrive with us for the UK at 8.30GMT, where we may get some price action.

‘’We suspect the down move has lost momentum and would allow for a corrective rebound near term.’’ Karen Jones, Head of FICC Technical Analysis, Commerzbank commenting.

Although the EUR/GBP has been satisfying the bears since its earlier decline from just below the figure, 0.8600, Bulls can look back on the daily charts to find some comfort should the pair hold above support at 0.8450 and the 55d moving average, where, if it does manage to hold decisively and close this week above, the pair might just entertain a move higher still towards levels recorded in summer 2011 where business was happily done then, and again at the start of this year.

Below here, on the downside, 8391 would be the three-month support line and if broken, would open up a bearish outlook yet again and the next firm support might be the 220-day SMA at around 83.00 the figure.

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