EUR/GBP Price Analysis: Bulls regain control, and target the 200-hour SMA at 0.8517
- On Wednesday, the EUR/GBP recorded gains of 0.42%, erasing Tuesday’s losses.
- A dampened market mood weighed on the risk-sensitive British pound.
- EUR/GBP Price Forecast: The 1-hour chart depicts the formation of a falling wedge preceded by an uptrend, with the 200-hour SMA as its target.
EUR/GBP recovers some ground after falling towards the 50-day moving average (DMA) at around 0.8396, though it is staging a recovery during the day but faltering to break above the 0.8500 mark, settling at around 0.8470s. At 0.8481, the EUR/GBP sits above the 200, 50, and 100-DMA and is ready to re-test the one-year-old downslope trendline, broken on May 6, though later reclaimed by EUR/GBP bears.
Risk-aversion keeps risk-sensitive currencies like the British pound under pressure. That benefits the shared currency, which despite recording losses against the greenback, its low-yield status vs. the pound, attracts investors as they seek safe-haven protection.
During the overnight session for North American traders, the EUR/GBP opened near the lows of the session, around 0.8440, and rose once EU inflationary readings crossed wires, at the same time that UK’s figures showed that inflation reached 9%. Both news caused a jump near the 0.8500 mark, but EUR bulls could not pierce the figure, retreating towards the 100-hour simple moving average (SMA) at 0.8479.
EUR/GBP Price Forecast: Technical outlook
The 1-hour chart depicts the pair as neutral biased but slightly tilted to the upside. EUR/GBP traders need to be aware of a falling-wedge chart pattern formed after a bullish impulse, meaning that once broken, the EUR/GBP should aim higher, targeting the 200-hour SMA at 0.8517.
However, for that scenario to play out, EUR/GBP traders would need to break above 0.8500. Break above would expose the 200-hour SMA at 0.8517, which, once cleared, would open the door for further gains around the R2 daily pivot at 0.8530, followed by the R3 pivot point at 0.8560.
