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- EUR/GBP eases from Thursday’s highs near 0.8580, but remains marginally higher on weekly charts.
- Rabobank experts see potential for further appreciation towards 0.8700 in the coming months.
- The pair has remained trading sideways since hitting resistance at 0.8585 in late July.
The Euro (EUR) nurses moderate losses against the British Pound (GBP), with price action contained within the previous day’s range and market volatility muted, as investors brace for Federal Reserve Chairman Kevin Warsh’s speech at Jackson Hole. The EUR/GBP pair has pulled back to levels near 0.8570 from Thursday’s highs right below 0.8580, with the weekly chart showing marginal gains.
Looking ahead, analysts at Rabobank expect “further range trading in EUR/GBP over the coming weeks, with a mild upside bias later in the year as fiscal realism weighs and BoE rate hike risk is further priced out.” In line with this view, the bank says it “maintain[s] a 3-month EUR/GBP forecast of 0.87.”
Technical Analysis: Key resistance is at 0.8585
EUR/GBP has been trading in a choppy and sideways manner since peaking at 0.8585 in late July. The pair is now trading at 0.8572, after another rejection at the 0.8580 area earlier in the week, with the near-term bias highlighting fading bullish traction.
Momentum indicators in 4-hour charts are pulling towards the neutral area. The Relative Strength Index lies around 57 while the Moving Average Convergence Divergence (MACD) sits just above zero, but the MACD line is attempting to cross below the Signal line, which is a bearish sign.
Bears remain contained above the 08570 area so far, but the key support area is at the August 25 low, near 0.8545, followed by the late July and mid-August low, in the 0.8530 area. Bulls, on the other hand, would have to break the mentioned 0.8585 area (July 30, August 20 highs) to shift the focus towards a previous support area, right above 0.8600 (June 24, 30 highs).
