Hurts the GBPUSD (or GBPUSD helps lead EURGBP higher)
The EURGBP is on the move higher. Support trend line was tested at hte 0.7109 level earlier today and we are now seeing the EURGBP make new session highs. The pair is approaching the 100 hour MA (blue line) and trend line at the 0.7175 level).
The move higher in the EURGBP is helping to push the GBPUSD back to the downside...Or is it the GBPUSD move lower, helping the EURGBP move higher? In either case, the two pair seem to be tied at the hip as the GBPUSD fell sharply, while the EURGBP was breaking higher. For the GBPUSD, the move lower extended the range for the day to new session lows. It also erased all the gains from the better UK data this morning and makes the 100 day MA test, look more like a test and a failure.
What makes me really cautious, however, is that the price for the GBPUSD tested 1.5400 and is right back up to 1.5430-39 currently. Meanwhile, the EURGBP scooted to 0.7164 and is now back at 0.7145. So do I trust the market? Not a whole lot. It seems to be perhaps driven by flows, stops. The trend line in the EURGBP did hold the line and did provide a level where traders could define and limit risk, but the recent push seems a little more random and flow driven (liquidity light too?).
