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  • EUR/GBP was seen consolidating in a range near mid-0.8700s, or multi-month lows.
  • Slightly oversold conditions helped the cross to defend descending channel support.
  • A sustained break below will set the stage for a further near-term depreciating move.

The EUR/GBP cross consolidated the recent fall to near nine-month lows and remained confined in a range, just below mid-0.8700s through the first half of the European session. The mentioned region marks the lower boundary of a short-term descending trend-channel, which if broken will set the stage for further weakness.

Meanwhile, slightly oversold conditions on 4-hourly/daily charts held traders from placing fresh bearish bets and limit the downside. This further makes it prudent to wait for a sustained breakthrough the trend-channel support before traders again start positioning for an extension of the recent/well-established bearish trend.

The EUR/GBP cross might then accelerate the slide towards challenging the 0.8700 round-figure mark. The downward trajectory could further get extended towards April 2020 swing lows, around the 0.8670 region.

On the flip side, attempted meaningful recovery attempt from current levels is likely to be short-lived and might still be seen as a selling opportunity near the 0.8800 strong horizontal support breakpoint. This, in turn, might cap the EUR/GBP cross near the top end of the trend-channel, currently near the 0.8835 area.

That said, a sustained strength beyond will negate the near-term bearish bias and indicate that the EUR/GBP cross has bottomed out in the near-term. The subsequent short-covering move might then push the EUR/GBP cross back towards the 0.8900 round-figure mark.

EUR/GBP 4-hourly chart

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Technical levels to watch