EUR/GBP Price Forecast: Under growing bearish pressure towards the 0.8600 area
|- The Euro depreciates for the third consecutive day against a stronger British Pound.
- Concerns about the French political crisis keep weighing on the common currency.
- EUR/GBP: A bearish move below 0.8595 would confirm a double top above 0.8740.
The Euro is trading lower for the third consecutive day against the British Pound on Wednesday, with bears attempting to break the bottom of an expanding wedge, at 0.8625 aiming for the bottom of the last two months’ trading range, at 0.8595.
In the absence of key fundamental drivers, the Euro is on the defensive, amid growing fears about the political crisis in France. French Prime Minister Francoise Bayrou has failed to find support in a vote of confidence scheduled for September 8, which will force President Macron to call another snap election.
Technical Analysis: Eroding the bottom of a Wedge Pattern
The EUR/GBP technical picture is negative. Monday’s price action has printed a bearish engulfing pattern, a strongly negative signal, and the pair is eroding the bottom of the last two weeks’ expanding wedge with momentum indicators deepening further within bearish territory in daily charts.
The key support area is at 0.8595-08600, where July 7 and August 14 lows meet the 30.6% retracement of the June-July rally. This is also the neckline of a potential double top, at late July and early August highs in the 0.8740-0.8750 area.
A confirmation below this level opens the doors to the 50% and 61.8% Fibonacci retracements of the mentioned cycle, at 0.8555 and 0.8505, respectively. The DT's measured target is the May 21 and June 2 highs around 0.8450
To the upside, Monday’s impulsive reaction from the 0.8670 area reveals an important resistance at those levels. Further up, the wedge top is now around 0.8700.
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