EUR/GBP Technical Outlook
- The market evaluates the probability of EU/UK trade deal
- EUR vs GBP price chart reveals a reversal pattern
EUR/GBP Price – Recovered Losses
On June 25, EUR/GBP declined to its lowest level in a week at 0.9001. However, the price rallied and closed the weekly candlestick in the green with a near 0.5% gain.
This week, the EU rejected the UK proposal to smooth the City of London access to European customers warning that both sides should prepare for “big changes” from the start of the year. Additionally, the German Chancellor Merkel repeated her call to be prepared that an agreement with the UK may not be reached.
EUR/GBP DAILY PRICE CHART (Aug 1, 2018 – July 3, 2020) Zoomed Out
EUR/GBP DAILY PRICE CHART (May 13 – JuLy 3, 2020) Zoomed In
On Monday, EUR/GBP rallied to a near three-month high at 0.9175 and declined after as some bulls seemed to cut back. Therefore, the price retreated to the low end of the current trading zone 0.9015 – 0.9149.
A closed below the low end of the zone reflects the bull’s hesitation and could send EURGBP towards 0.8912. A Further close below that level may encourage bears to press towards 0.8832.
On the other hand, any failure in closing below the low end of the zone indicates that bullish momentum is still intact, and this may cause a rally towards the high end of the zone. A further close above that level may extend the rally towards 0.9248.
EUR/GBP FOUR HOUR PRICE CHART (June 6 – JuLY 3, 2020)
On Wednesday, EURGBP broke below the uptrend line originated from the June 16 low at 0.8912, and generated a bearish signal. Currently, the price trades above the neckline of the head and shoulders pattern residing at 0.9002, and any violation of this level would generate a bearish signal.
To conclude, a break in above 0.9055 may trigger a rally towards 0.9132. While any break below 0.8988 could send EURGBP towards 0.8912. Nevertheless, the daily support and resistance levels underscored on the four-hour chart should be considered.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
