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EUR/GBP Price Forecast: Euro approaches 0.8360 with bulls gaining confidence
- EUR/GBP accelerates its recovery on Tuesday and nears the range top in the 0.8360 area.
- The sharp decline in Oil prices is boosting the Euro while the BoE’s hawkishness keeps GBP dips limited.
- A clear break of 0.8360 would confirm a bottom at 0.8320 and shift the focus towards the 0.8400 area.
The Euro (EUR) accelerates gains against the British Pound (GBP) on Tuesday, after the mild recovery witnessed in the previous three days, favoured by falling Oil prices and a more positive market sentiment. The EUR/USD pair remains trapped within the last two weeks’ trading range, between 0.8320 and 0.8360, although momentum indicators show an initial bullish impulse.
Both currencies have rallied against the US Dollar in the last few days, but the Euro has been showing a mild competitive advantage, amid the sharp decline in Oil prices –Brent Oil has dropped 20% in about a week, which has taken a great burden off the Eurozone economies’ shoulders.
The Pound, on the other hand, is drawing support from the Bank of England’s (BoE) hawkish monetary policy stance following last week’s decision. The BoE hiked its Bank Rate by a quarter point, to 4%, as expected last Thursday and left the door open for further monetary tightening ahead. UK Gross Domestic Product (GDP) and Industrial Production data, due on Thursday, will be carefully analysed to confirm those projections.
Technical Analysis: Above 0.8360, the focus will shift to the 0.8400 area
EUR/GBP trades at 0.8358, with the immediate trend showing a modest bullish bias, although it remains within a 40-pip range, just above 19-month lows. Momentum indicators in four-hour charts have turned positive, with the Relative Strength Index (14) hovering just under 60, and the Moving Average Convergence Divergence (MACD) just above zero, hinting that buyers retain the short-term initiative.
Bulls, however, should break resistance at the 0.8360-0.8365 area (October 30, November 3 highs), to confirm a deeper correction towards the October 26 high at the 0.8400 area and the October 19 and 20 highs near 0.8430.
On the downside, a bearish reaction below the range bottom at 0.8320 might find some support at the late February 2025 highs, just above 0.8300, ahead of the 2025 low at 0.8246.
