Pound has sold off heavily on Tuesday but there are plenty of reasons to buy especially against the weaker currencies. UK economy has been hit with the uncertainties of Brexit but nothing has seriously changed yet and recent news has generally been positive with reasonable expectations of this continuing. The EURO on the other hand has a stagnant to declining economy with simmering problems both politically and financially. Don’t be surprised to see another EU country reporting major problems besides Greece. Their are growing rumours of insolvency within the Italian Banking Sector. France and Germany have elections in the next 12months and their is growing resentment towards the ruling parties. Maybe they will have to use measures to stimulate the economy to save their political skins. The next ECB Press Conference is 20th October. Will that be the time??
Possible H&S Setting up. Right shoulder has not yet formed the area .8570 to .8590 is the 618 of the head and we are at a weekly reversal zone. It will probably be a couple of days before we get to this area but be alert to the high impact BOE release on Thursday.
If this works to plan there is approx 250 pips to the neckline plus another 400 on the measured move which will take a considerable time to play out.