I stand by corrections. A market ALWAYS corrects. ALWAYS. Nothing moves in a straight line. And the GBP, in particular. The GBP is highly likely to retrace price moves with a correction that moves to the Fibonacci retracement levels. But the $EURGBP has defied all of these adages. For over 2 months, the $EURGBP has impossibly moved in a straight line!
But if we drill down into this rally, the daily chart shows a correction that has actually moved higher. This currency pair has, indeed, experienced an correction. A correction through time rather than an actual correction through price (that would see a move lower). And when a currency pair cannot correct through price, it is extremely strong indication of the strength of the trend move.
So what could make the $EURGBP move into a correction lower? Perhaps a restart of the quantitative easing program by the European Central Bank? Perhaps. It would have to surprise markets so that fact that this is already being whispered means it is already being priced in. Maybe a quick Brexit deal that pleases all sides? Maybe but this is so unlikely it is improbable. With no real fundamental reason for a move to the downside, I expect the $EURGBP to continue to grind higher for another rally higher. The 0.9050 level is the next target for bulls with downside targets as the Fibonacci levels pictured above on the daily chart.
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