EUR/GBP – Broader Bearish Trend Poised for a Pause

EUR/GBP edged higher on Friday after a sharp three-day selloff failed to deliver a decisive break below key support at 0.8552, the 50% Fibonacci retracement of the 0.8239–0.8865 rally and the base of the weekly Ichimoku cloud. The pair’s rebound has produced a bear-trap pattern on the daily chart, opening the door for a corrective recovery.

The euro remains under pressure amid a marked slowdown in Eurozone economic growth, lingering geopolitical uncertainty, and elevated energy costs. In contrast, sterling has drawn support from easing political concerns and expectations that the Bank of England may keep interest rates higher for longer as inflation continues to run above target.

A bullish reversal pattern is beginning to emerge on the daily timeframe, although confirmation is still needed through a stronger bullish daily candle and a close above 0.8580, the 23.6% Fibonacci retracement of the 0.8689–0.8545 decline.

The hourly chart already shows encouraging bullish signals that support the recovery scenario. However, daily indicators remain mixed, with moving averages still aligned bearishly while RSI is turning higher from oversold territory, limiting the scope for a stronger rebound.

A sustained move above 0.8580 would bring the 0.8600 area into focus, where the 38.2% Fibonacci retracement converges with the 10-day moving average. A break above this barrier would strengthen bullish momentum and signal a deeper recovery.

Conversely, failure to overcome the 0.8600 hurdle would keep the broader bearish trend intact and could offer attractive levels for sellers to re-establish short positions.

Res: 0.8580; 0.8600; 0.8620; 0.8634
Sup: 0.8545; 0.8507; 0.8478; 0.8458