EUR/GBP Remains Under Pressure in Descending Channel

Market Overview

On Wednesday, the British pound faced downward pressure due to weaker-than-expected consumer and producer inflation figures, alongside a soft labor market in the UK. These factors have increased expectations for the Bank of England (BoE) to cut interest rates by 25 basis points in both November and December. However, the euro remains under additional pressure, driven by cautious European Central Bank (ECB) tightening and expectations for further rate cuts. Additionally, high U.S. Treasury yields and a stronger U.S. dollar have weighed on the euro, further pushing down the EUR/GBP pair.

Technical Analysis

In the 4-hour timeframe, EUR/GBP is trending lower within a descending channel. Following a rejection at the channel’s upper boundary near 0.83462, the pair has resumed its downward move. The current price action suggests increased selling pressure, and a sustained break below the support at 0.83186 could lead to additional losses, targeting support levels at 0.83111, 0.83015, 0.82910, and ultimately the lower boundary at 0.82739.

Technical oscillators align with this bearish outlook. The RSI remains in a downward trajectory, reflecting strong selling momentum, while the MACD is positioned in negative territory, indicating ongoing weakness. Moreover, the price remains below the moving averages, further supporting the bearish case.

Alternative Scenario

The alternative scenario would involve a move above the key resistance at 0.83462. A break of this level could trigger renewed buying interest, potentially leading to a test of higher levels.

Key Levels Overview

Resistance Levels:

• Resistance 1: 0.83186
• Resistance 2: 0.83462

Current Price: 0.83180

Support Levels:

• Support 1: 0.83111
• Support 2: 0.83015
• Support 3: 0.82910
• Support 4: 0.82739

Key Events to Watch

The EUR/GBP pair remains susceptible to several key economic events. One major event this week is the UK’s 3-year bond auction, which could influence gilt yields and demand for the pound. Additionally, investors will closely follow ECB President Christine Lagarde’s speech on Wednesday evening, which may provide insights into the ECB’s future policy direction, thereby affecting the euro. Furthermore, BoE Governor Andrew Bailey’s speech is expected to shed light on the outlook for monetary policy in the UK. These events are likely to add volatility to the EUR/GBP pair, making it important for traders to remain attentive.

Conclusion

EUR/GBP continues to face selling pressure within the descending channel, with support levels likely to be tested if the bearish trend persists. A move above 0.83462 could shift momentum, but until then, the outlook remains bearish. Traders should closely monitor upcoming economic events for potential market drivers.