EUR/GBP continues march higher but runs closer to key resistance points
How much higher can EUR/GBP go?
The pair has been on a solid run since bottoming out around 0.8500 at the start of May and the pace of gains seen has been unrelenting. If things stay as they are, this week will see the euro post an unprecedented eleven successive weeks of gains against the pound.
The pair is now posting fresh six-month highs at 0.9051 but is moving closer towards the swing highs posted back in December and January around 0.9055-88. Beyond that, further resistance is seen near the 0.9100 handle with the January high seen at 0.9108.
I reckon this region will be a key test for EUR/GBP in the coming week. If price stalls out around these levels, this may just be as good as it gets for the current win streak. But if buyers are able to extend the momentum above the levels pointed out, the next key resistance level is only seen at the August 2017 high of 0.9306.
That means there is plenty of breathing room to extend to the upside still but only if buyers can navigate through the resistance levels above.
Once again, it must be reiterated that the gains seen in the pair here is largely ascribed to pound weakness so be aware of stretched positioning and potential short covering in the currency if traders see fit.
Short pound positions were already seen at their most stretched since September 2018, based on CFTC data last week. And after the recent moves, I reckon that has probably stretched further and is something to consider when gauging further weakness to come.
CFTC net positioning - GBP (no. of contracts)