- Pound loses momentum and retreats for the second day in a row.
- EUR/GBP points to a potential bottom near 0.8850.
The EUR/GBP has risen more than a hundred pips from Wednesday’s low and is testing the 0.9000 area. The sharp rebound took place amid a weaker pound across the board. The cross is having the biggest daily gain in months.
While GBP/USD trades at multi-day lows at 1.3130 the EUR/USD is testing daily highs. The divergence points to a weakening pound and a correction after a significant rally.
EUR/GBP: Trends still point lower
The short-term technical outlook shows the EUR/GBP with a strong bullish tone. The next resistance above 0.9000 is seen at 0.9025. The critical level could be seen around 0.9050/60, an area of many key moving averages and a downtrend line from September highs. A consolation above 0.9060 would negate the negative bias and sign that it has established a bottom at 0.8860.
On the flip side, a slide back below 0.8970 could alleviate the current bullish pressure. Favoring a consolidation at lower levels. The key support is the 0.8860 area that capped the downside many times during 2020.
Technical levels
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