Euro looks further vulnerable against Pound, as technical has now aligned with fundamentals for the pair and there are now follow-throughs.
Fundamentally speaking -
- Bank of England's (BOE) policymakers have strongly reiterated their view to raise rates next year, while European Central Bank (ECB) is pursuing ultra-easy monetary policy. Expectations are growing that ECB will expand its asset purchase program, which will surely push Euro down a lot.
- Though Euro zone surely have higher growth potential, as of now UK's economy is clearly steering ahead.
Technically speaking -
- Euro has broken below its recent range against pound as shown in the chart has now potential to drop further at least towards 0.7125 area from current 0.72.
- Since the position is aligned with fundamentals, Euro might reach beyond the level and dropped further after initial bounce back.