EUR/GBP Price Forecast: Steadies near 0.8500 with upside attempts limited
The Euro (EUR) is trading practically flat against the British Pound (GBP) on Monday after dropping about 2% over the past three weeks. Euro bulls remain subdued amid the risk-averse mood, but sellers are struggling to find acceptance below 0.8500.
Escalating tensions in the Middle East and the closure of the Strait of Hormuz are weighing heavily on the Euro, as higher Oil prices are pressuring the European Central Bank (ECB) to hike rates further in the context of sluggish economic growth.
The British Pound, by contrast, is showing resilience amid the US-Iran conflict and the political impasse in the UK. Investors have granted the benefit of the doubt to Andrew Burnham, who is expected to be nominated leader of the Labour Party on Friday and Prime Minister on July 20.
Technical Analysis: Bears are showing signs of exhaustion
EUR/GBP trades at 0.8520, trading within a descending wedge, yet with momentum indicators hinting at a fading bearish impulse and the four-hour Relative Strength Index (14) showing a bullish divergence as it trends toward the 50 midline. Beyond that, the Moving Average Convergence Divergence (MACD) line, in the same timeframe, hovers slightly above zero, adding to the case for a potential bullish correction.
On the downside, immediate support is located at Friday's low in the 0.8510 area, ahead of the wedge bottom, now around 0.8500. Below these levels, there is no clear support area ahead of the early June 2025 lows, in the area of 0.8420.
On the topside, initial resistance is aligned with the descending trendline barrier, now around 0.8530, followed closely by a previous support-turned-resistance in the 0.8535 area. A confirmation above these levels would ease bearish pressure and shift the focus to the July 2, 3, and 6 highs, around 0.8570.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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