Outlook for sterling as holidaymakers book Euro breaks

With the pairing recently hitting a three-month low, our chartist looks at the potentials.

GBP:EUR

There's no point in revisiting our last look at GBP:EUR as the Covid-19 drop achieved our miserable drop targets.

Visually, there appears danger, yet again, of some reversal, but we're inclined to place a fairly distant trigger level.

At present, there's the threat of weakness below €1.0888 bringing reversal to an initial €1.0677, with secondary, if broken, down at €1.0151.

We would hope for a rebound, if this secondary makes itself known.

Visually, our initial drop target level at €1.067 should prove capable of giving some sort of bounce, if only thanks to the presence of the red uptrend since 2009.

The big picture problem with our secondary at €1.015 takes the currency pairing into the land of lower lows, making any recoil liable to be short-lived until the relationship finally succumbs to the temptation of parity for a while.

For things to suggest that sterling is strengthening against the euro, the pair requires to trade above €1.1727 to convince us.

Despite the post-Covid-drop recovery of €1.15 presenting a visual trigger level, we're inclined to make greater demands as the relationship needs to exceed blue on the chart to enter a cycle to an initial €1.199 with secondary, if exceeded, a rather more attractive looking €1.248 and beyond.

Source: Trends and Targets      Past performance is not a guide to future performance

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.