Renewing selling pressure causes EURGBP to see a decline to almost two-week lows. On short-term charts, the rectangle pattern that forms suggests that traders are still determining their next move.
Before making substantial directional wagers, neutral technical indications also call for prudence. During the first part of the European session on Friday, the EURGBP cross falls to a low about two weeks old, but it still maintains some strength below the 0.8700 level.
The relative outperformance of the British pound coincides with a growing consensus that the Bank of England would increase borrowing rates further to confront persistently rising inflation. Additionally, the Sterling Pound is supported by the generally positive UK monthly retail sales data, which also puts downward pressure on the EURGBP cross.
However, discussions for a more aggressive policy tightening by the European Central Bank provide support for the common currency. The wagers were confirmed by remarks made earlier this Friday by ECB President Christine Lagarde. As a result, this prevents bearish traders from making risky bets on the EURGBP cross, preventing additional losses.
Looking at the bigger picture, spot prices have fluctuated inside a well-known trading range for the previous two weeks. On short-term charts, the range-bound price action has formed a rectangle pattern, indicating a period of consolidation and suggesting uncertainty on the direction of the EURGBP cross’s subsequent rise.
Additionally, the daily chart’s neutral technical indicators have yet to help point in a clear direction for the foreseeable future. Because of this, it is wise to wait to initiate aggressive bets until there has been a consistent breakthrough through the short-term range before determining the EURGBP cross’s near-term trajectory.
On the other hand, some technical selling will result from some follow-through selling below the 0.8690 regions, which will be seen as a new trigger for bearish traders. The EURGBP cross may pick up speed and go straight for the 0.8635 intermediate support on its way to the 100-day Simple Moving Average, which is now located between 0.8610 and 0.8600. As is often the case with levels that have been struck several times, any break below might be volatile.
On the other hand, a strong, immediate barrier has now been established in the 0.8775-0.8780 region. The next significant obstacle is between the round-figure marks of 0.8800 and 0.8820-0.8825. A prolonged strength above the latter will signal a bullish breakout and the beginning of another short-term appreciating trend.
The EURGBP cross can pick up speed as it approaches the resistance level of 0.8850-0.8860. The bulls should be able to retake the 0.8900 level thanks to the following constructive move. To reach the psychological level of 0.9000, some follow-through purchasing might push the pair cross beyond the 0.8945-0.8950 intermediate barrier.