EUR/GBP Technical Analysis
- EUR/GBP remains in consolidation mode
- Brexit is clouding fundamental landscape
- Technical analysis hints turn higher next
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EUR/GBP remains in persistent consolidation mode since its descent through April 2018 lows in late February. Prices have spent most of the time since then ranging between well-defined resistance just under 0.86983 and persistent-support above 0.84722. Brexit-related news is creating elevated anticipated volatility in the British Pound outlook, clouding the fundamental landscape.
Until a resolution of some sort is made, whereby it becomes clearer what the next phase is in the UK’s position with the EU will be, more of the same could be in store for Sterling. Technical analysis does show where EUR/GBP could be heading next, but do keep in mind that significant follow-through, be it up or down, should come with a supportive fundamental backdrop.
On the daily chart below, the pair has formed a Morning Star bullish candlestick pattern. Simultaneously, positive RSI divergence is still present, indicating that downside momentum is fading. Both of these price signals warn that perhaps the Euro might find some lift against the British Pound.
Clearing resistance above 0.8698 open the door to testing 0.88108 after. Otherwise, descending has 2016/2017 support levels eyed above 0.83001. I am closely following the pair’s performance and you may follow me on Twitter here @ddubrovskyFX to stay updated.
EUR/GBP Daily Chart
Chart Created in TradingView
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--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter