EUR/GBP Bears Eye Further Declines as Pound Strengthens

Tuesday Market Overview:

The British pound has been one of the top-performing currencies among major peers this year, primarily due to the Bank of England’s (BoE) decision to maintain high interest rates in response to stronger-than-expected wage and services inflation. Recently, signs of slowing US growth have weighed on the dollar, supporting the pound. Additionally, investor and analyst sentiment suggests that hopes for greater stability following the general election and a decisive Labour Party victory have been beneficial.

Technical Analysis:

The pound’s strength against the euro has increased selling pressure on the EUR/GBP pair on the hourly chart. The crossover of the 34-period and 100-period moving averages, combined with continued downward movement in the RSI and MACD indicators within the sell zone, reinforces the bearish scenario. Sellers are now focusing on breaking the support at 0.84457, with the market’s attention shifting to the next key level at 0.84389. If the bearish momentum persists and breaks this level, the subsequent targets are 0.84341, 0.84268, and 0.84212.

Alternative Scenario:

If sellers fail to breach the 0.84457 support level, the price may enter a sideways trend with the upper resistance at 0.84566, just below the 34-period moving average.

Market Overview and Key Levels

Resistance Levels:

• Resistance 2: 0.84566
• Resistance 1: 0.84457

Current Price (at the time of analysis): 0.84449

Support Levels:

• Support 1: 0.84389
• Support 2: 0.84341
• Support 3: 0.84268
• Support 4: 0.84212

Impactful Events:

The short-term market trend indicates that the price has absorbed the impact of the declining retail sales monitor index announced earlier today and is now awaiting Federal Reserve Chairman Jerome Powell’s speech. Currently, the pound is holding stronger against the dollar compared to the euro.

Oscillators and Risk Warnings:

RSI (Relative Strength Index): Bearish, indicating selling pressure.

MACD (Moving Average Convergence Divergence): Bearish, supporting the downtrend.

Moving Averages: Bearish, reflecting the negative price action.

Conclusion:

The EUR/GBP pair is under significant selling pressure due to the pound’s strength, driven by the BoE’s high interest rates and positive sentiment following the general election. If the pair breaks below the 0.84457 support level, it could target 0.84389, 0.84341, 0.84268, and 0.84212. However, failure to break this support may lead to a sideways trend with resistance at 0.84566.

Investors should closely monitor Powell’s upcoming speech and subsequent economic data releases, as these will provide crucial insights into market sentiment and potential movements in the EUR/GBP pair. Staying attuned to these key events and technical levels will help traders navigate the current market environment effectively.