Hello and welcome to CantosCharts. My name is James Hughes from spread betting firm CMC Markets.

Today we're going to talk to you about GBP and EUR/GBP, to be precise.

We've got EUR/GBP, as you can see, in a really strong downtrend. It really has been since before the general election. The election and the uncertainty surrounding that really pushed this into more of a downtrend as well. We've seen a lot of touches to this as well. Of course three makes this a downtrend and we've seen actually more than three. Markets coming down, coming quite low and then pushing back up to it and failing at those levels. So again it's a real strong downtrend that we are seeing here.

But what we've also seen very recently is the economic recoveries in the US, the eurozone and the UK begin to stutter. We've seen quantitative easing come back into the US and that's been really key in dominating where these markets are going to go and we've seen, like we showed in the indices, we've seen a period of sideways trading where we're pretty much range bound on the S&P and the FTSE. Looking into some of these currencies, we're seeing pretty much the same thing.

Now this is a slightly wider range that we've got and of course we've got a slanting downtrend to really hold us up, but we are seeing this range trading. We've got some important levels within here as well where the market is going to bounce around off of.

The downtrend at the moment, as we say, holding since back in late March or so, so it's a real strong downtrend. Three tests to confirm it. We've seen more than that, so it's been pretty aggressive on the downside.

When we start to get a little bit lower, we've got the 80.70 level which is really acting as the furthest support on the downside there. That's going to be a key one if we start to break, but first we've got this pretty much where we are at the moment this 81.70, 81.65 level. That has been a key level for a little while. It's quite a tight range that we see ourselves in and because of the weakness that we've seen generated by a lot of these economic recovery fears, the chances are that we're going to break through this downside level and then get to test the 80.70 on the downside.

This 80.70 level is going to be pretty much like we said about the gilts yesterday, a key one because we've seen some pretty aggressive moves and we haven't just been slowly moving up or slowing moving down on either side over the last couple of months or so.

It's important that when we get down to these levels that we see big moves either side. If we do see a break, the likelihood is that we're going to break pretty aggressively to the downside. If we do hold up, then a lot of people are talking that this downside trend line resistance on the upside 83.60, 83.55 is going to be the key level on the upside. So it's going to be important to see exactly where we go within that.

Of course the big question is going to be how bad the economic recoveries have begun to be. The US has showed us already with the quantitative easing from the Fed. Talk is that we're going to get quantitative easing in the UK. The eurozone maybe be able to escape it a little bit, but still we're seeing the start of the more weaker numbers. This is where the economic recovery fears came in for the US when we started to see weaker numbers coming out of the economy and again we're getting pretty much the same thing now in the UK and starting to get that in the eurozone. This means that we can expect even more nervousness as we get closer to these levels.

As you can see, this is going to act as a bit of a pincer movement of course because as the market continues to go down within its trend, we're going to get this downside support level really acting as a key point. So it's going to get pincered in and then one side we're going to have to see a break either way.

So it's going to be interesting to see over the next few weeks or so just where this one goes. But with the uncertainty about recoveries still hanging over us, anyone's guess is where this one could go. But all we can say is that once we do see a break, it's going to be an aggressive move either way.

Thanks for listening. My name is James Hughes from spread betting firm CMC Markets.