In our today’s EURGBP forecast, we examine the pair’s recent price action using the 4-hour chart, but first let’s check the recent updates on the United Kingdom’s economy.
UK Stock Market: Mild Decline in FTSE 100 Index
Reuters — The FTSE 100 index experienced a small dip at the start of the week, falling just below the 7,475 level on Monday. This slight decrease continues the trend from the previous week. Traders displayed caution, holding back from making significant investments. This restraint is mainly due to the anticipation of important economic updates expected during the week, such as new inflation figures from the United States and manufacturing data from China. These releases are particularly influential for the resource-heavy London stock market.
Companies associated with commodities witnessed a downturn, influenced by minor decreases in the prices of crude oil and copper. Oil giants Shell and BP both saw their shares fall by around 1%. Similarly, mining companies like Rio Tinto, Antofagasta, and Glencore each saw a retreat of about 0.5%.
Contrasting with the general market trend, pharmaceutical company GSK experienced a slight increase in its share price. This positive shift followed the announcement of successful phase-3 results for its blood cancer medication.
EURGBP Forecast: Technical Analysis
During Friday’s trading session, the EURGBP bears successfully broke below the bullish channel, intensifying the downward pressure. Currently, the pair is testing the 0.8674 support level. Concurrently, the Relative Strength Index (RSI) is indicating oversold conditions, and the Awesome Oscillator’s histogram has turned green. However, the overall market sentiment remains bearish for the EURGBP pair as long as it stays below the 0.86941 support level. This level, aligning with the previously broken bullish trend line, supports the notion that the pair may continue to decline, potentially targeting the 0.8649 level next.
For a shift in this bearish scenario, it would require the EURGBP bulls to regain control and stabilize the price above the 61.8% Fibonacci retracement level. Such a move would invalidate the current bearish outlook and could signal a change in the EURGBP pair’s direction.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.