EUR/GBP tumbles to lowest in a month as pound soars

EUR/GBP has fallen significantly during the last two days and today accelerated the decline on the back of a rally of the pound in the market. GBP/USD reached 1-month highs above 1.2500. 

Reversing with stocks and bonds 

After the initial reaction following Trump’s victory, EUR/GBP peaked above 0.9000 but then it started to decline in tandem with the reversal in equity prices and bond yields. Yesterday it broke the strong support area at 0.8850 and today the 0.8770 zone. 

It extended the slide during the American session and bottomed at 0.8660, the lowest level since September 30. Price remains near the lows holding a bearish tone. The slide represents the break of a 4-week trading range between 0.9050 and 0.8850. 

For the second day in a row, EUR/GBP is falling more than a hundred pips. The next medium-term support could be seen around 0.8600-0.8590 and below at 0.8485. On the opposite direction, now the 0.8850 area is a resistance and above here the next level to watch is the 0.8920 (20-day moving average).