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EUR/GBP Price Forecast: Attempting to regain 0.8400 after hitting oversold levels
- EUR/USD has bounced up from 17-month lows near 0.8370 but remains capped below 0.8400 so far.
- High Oil prices and concerns about France’s fiscal health are likely to keep Euro rallies limited.
- The Pound remains strong as recent UK data endorses the idea of a BoE rate hike in November.
The Euro (EUR) shows a mild bullish correction against the British Pound (GBP) on Thursday, following a more than 2.7% selloff from late September highs that had pushed the Relative Strength Index to heavily oversold levels in most timeframes. The EUR/GBP pair trades around 0.8390, after hitting fresh 17-month lows near 0.8370 on Wednesday, with 0.8400 capping rallies for now.
A slightly brighter market sentiment is supporting the Euro on Thursday, although the high Oil prices and the ongoing concerns about France’s fiscal issues, as well as the government’s difficulties in resolving them, are likely to put a lid on the pair’s recovery.
The Pound, on the other hand, is likely to remain strong, as the hot UK inflation figures released on Wednesday and the positive Gross Domestic Product (GDP) figures seen last week have paved the path for the Bank of England (BoE) to hike interest rates at its November meeting.
Later in the day, BoE’s Governor Andrew Bailey will meet the press and might provide further guidance about next month’s meeting. In Europe, European Central Bank (ECB) official and Bank of Italy Governor, Fabio Panetta, will take the stage ahead of the release of the European Commission’s preliminary Consumer Confidence report.
Technical Analysis: Dead cat bounce
EUR/GBP trades at 0.8393, keeping the broader bearish trend intact after having depreciated continuously over the last four weeks. The pair shows a mild corrective reaction as the 4-hour Relative Strength Index (RSI) picks up from heavily oversold levels, although it remains below 40. The Moving Average Convergence Divergence (MACD) is marginally positive, but the whole picture suggests that rallies are likely to find sellers.
Immediate resistance is seen at Wednesday’s top at the 0.8400 area, followed by the October 19 and 20 highs, near 0.8430. On the downside, below Wednesday’s low near 0.8373, the next bearish targets are the May 2025 low, near 0.8355, and the April 2025 bottom, around 0.8320.
