The EUR/GBP pair continued its decline, with a clear pattern of higher highs and lower lows reinforcing the corrective trend. While a short-term bounce is possible, a break below the 200-DMA at 0.8630 could open the door to deeper losses, foreign exchange analysts at Société Générale note.
The downward channel is pressuring EUR/GBP
“The EUR/GBP pair continued its decline after facing strong resistance near 0.8865 in November. The pair is forming a series of lower highs and lower lows on the daily time frame chart, indicating a corrective phase. It is now near the lower border of the descending channel and the 200-DMA around 0.8630.”
“A short-term bounce cannot be ruled out; however, last week’s high at 0.8745 is likely to act as resistance. Failure to hold the moving average at 0.8630 could lead to a deeper bearish move towards August lows at 0.8590 and 0.8555/0.8540.”
