EUR/GBP has gotten the stuffing knocked out of it in the last little while. The move has not been helped by a sour outlook for the UK economy from the Chancellor of the Exchequer who is speaking on the floor of the House of Commons. About the most constructive thing he has said toward the pound is that there is no evidence of lasting damage to the UK economy from the global financial crisis. The euro zone debacle is a serious downside risk for the UK, he says.
The cross has slipped through support in the 0.8550 area on the short-term charts and is eying the 0.8420 area, a significant zone of support. A sustained break of that area suggests about 1 cent of downside based on recent price action.
Traders note chatter of Middle Eastern buying in cable at the moment (isn’t there always?) as well as talk of heavy GBP demand at the 16:00 fixing.
