- EUR/GBP retreated sharply from the fresh YTD peak touched earlier this Wednesday.
- The inverted head and shoulders breakout supports prospects for some dip-buying.
- Sustained break below 0.8400 is needed to negate the near-term positive outlook.
The EUR/GBP cross witnessed an intraday turnaround on Thursday and retreated around 60-65 pips from the fresh YTD peak - levels just above the 0.8500 psychological mark. The cross, for now, seems to have snapped three successive days of the winning streak and was seen trading around mid-0.8400s during the second half of the European session.
The British pound's relative outperformance followed the release of a better-than-expected UK GDP print, which showed that the economy expanded by 1.3% in A4 2021 as against the 1% estimated. On the other hand, the shared currency stalled its recent bullish run amid fading hopes of diplomacy in Ukraine, which revived fears about the economic fallout from the crisis.
From a technical perspective, the strong move up witnessed since the beginning of this week confirmed a bullish breakout through a resistance marked by the neckline of an inverted head and shoulders pattern. A subsequent move beyond the very important 200-day SMA further added credence to the constructive set-up and supports prospects for the emergence of some dip-buying.
Hence, any further decline could be seen as an opportunity for bullish traders and is more likely to find decent support near the 0.8400 mark. The said handle should act as strong base for the EUR/GBP cross, which if broken decisively might negate the bullish outlook. The corrective slide could further get extended towards the next relevant support near the 0.8335 region.
On the flip side, the 0.8500-0.8510 region now seems to act as an immediate hurdle. This is followed by a downward sloping trend-line extending from April 2021, around the 0.8535-0.8540 zone, which if cleared would set the stage for additional gains. The momentum could then allow the EUR/GBP cross to aim back to reclaim the 0.8600 round-figure mark.
EUR/GBP daily chart
-637843298239125688.png)
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.