EUR/GBP – Temporary Recovery Likely Before Bears Resume Control
EUR/GBP traded within a narrow consolidation range on Thursday after a sharp selloff in recent sessions pushed the pair to its lowest level in more than a year.
The cross is also on course for a third consecutive week of heavy losses, with sterling continuing to draw support from a calmer political backdrop following Prime Minister Starmer’s resignation. While uncertainty persists over the policy direction of incoming PM Burnham and the composition of the new cabinet, markets have so far welcomed the reduced political turbulence.
Deeply oversold conditions on the daily chart suggest that the recent bearish momentum may ease in the near term, allowing for a period of consolidation or a modest corrective rebound. However, the broader bearish trend remains firmly in place.
Initial resistance is seen at 0.8543, the former 50% Fibonacci retracement of the 0.8222–0.8865 rally, followed by 0.8553, where the broken 100-week moving average converges with the base of the weekly Ichimoku cloud. A weekly close below these levels would reinforce the prevailing bearish structure and keep downside risks elevated.
Any stronger recovery attempt is expected to face significant resistance ahead of the 0.8600 area, where the falling 20-day moving average and a former support zone converge. As long as rallies remain capped below this key barrier, rebounds are likely to be viewed as corrective in nature and may offer opportunities for sellers to re-enter positions, paving the way for another leg lower.
Res: 0.8543; 0.8553; 0.8566; 0.8600
Sup: 0.8500; 0.8467; 0.8449; 0.8414
