EUR/GBP Price Forecast: Fails at 0.8610 amid higher Oil prices, BoE hawkishness

The Euro (EUR) has failed to break the 0.8610 resistance level against the British Pound on Monday, sending the EUR/GBP pair back to session lows at 0.8690 at the time of writing. The frail market sentiment after the US refusal of Tehran’s ceasefire plans, an uptick in Oil prices and a more hawkish stance by the Bank of England (BoE) are posing a significant weight on the common currency.

BoE Governor Andrew Bailey affirmed on Friday that it is becoming increasingly harder to keep interest rates on hold amid rising price pressures. These comments follow similar ones by the bank’s Deputy Governor, Clare Lombardelli, and boost hopes that the BoE will finally tighten its monetary policy despite the weak economic momentum.

Beyond that, the Middle East conflict remains highly unpredictable after the refusal of the latest plan to halt hostilities and reopen the Strait of Hormuz. Oil prices have ticked higher, with the Barrel of Brent trading above $98.00, up from Friday’s lows at 96.40, which poses additional pressure on the already troubled Eurozone economies.

Technical Analysis: Bears gain confidence after rejection at 0.8600

EUR/GBP trades at 0.8591, still moving within an upward parallel channel, although sellers are gaining momentum after the rejection above 0.8600. The 4-hour Relative Strength Index (14) has retreated below 50, hinting at fading upside momentum, while the Moving Average Convergence Divergence (MACD) has slipped marginally below zero with a softening histogram.

Bears are pushing against the September 24 lows at 0.8592, aiming for the September 18, 19, and 22 lows, in the 0.8570 area, ahead of the channel floor at 0.8560.

On the topside, initial resistance aligns at the mentioned 0.8610 channel top, ahead of the late June highs, in the 0.8630 area. Further up, the June 26 spike high at 0.8650 looks like a plausible target.