The EUR/GBP pair rally during the trading session on Wednesday, breaking towards the 0.8750 level. Although this is a very bullish move, I need to see this market break above the 0.88 level to feel comfortable going long. In the meantime, expect a lot of noise and I think that you could expect a lot of trouble if you are not careful. I think if you break above the 0.88 handle, the market then goes to the 0.89 level after that. Alternately, I think that we could see a bit of selling pressure near the 0.8780 level, and if we do see that pressure, we could roll over and start selling off again. At that point, I would anticipate that the market could go to the 0.87 handle underneath again, possibly even the 0.86 level which is a major level on longer-term charts.
The volatility should continue, mainly because this market is the epicenter of reaction to the negotiations going on between the European Union and the United Kingdom, which of course can cause a lot of noise. Headlines coming out of London and Brussels both can move this market and can move it quite suddenly. Because of this, I anticipate that it is probably best to trade this market with smaller positions, as the moves can be dangerous, and of course you need to keep in mind that the tick value in this pair is almost double many others.