EUR/GBP Price Analysis: Faces rejection near 0.8700 mark, bullish potential intact

The EUR/GBP cross struggled to capitalize on its early uptick and faced rejection near the 0.8700 mark for the second straight session on Monday. The British pound witnessed a modest short-covering bounce during the early European session and dragged the cross back closer to mid-0.8600s in the last hour.

Looking at the technical picture, the EUR/GBP cross last week confirmed a bullish breakout through a falling wedge chart pattern. A subsequent move beyond the 23.6% Fibonacci level of the 0.9218-0.8472 decline supports prospects for an extension of the recent sharp recovery from over one-year lows.

The constructive set-up is reinforced by the fact that technical indicators have just started moving in the bullish territory on the daily chart and eased from the overbought zone on the 4-hour chart. Hence, any meaningful pullback might still be seen as a buying opportunity and remain limited.

From current levels, immediate support is pegged near the 0.8630-25 region. This is followed by the 0.8600 round-figure mark. The latter coincides with the falling wedge breakpoint and should now act as a strong base for the EUR/GBP cross amid absent relevant market moving economic releases.

On the flip side, the 0.8700 area now seems to have emerged as an immediate strong resistance ahead of the 38.2% Fibo. level, around the 0.8740-50 supply zone. A sustained move beyond should allow the EUR/GBP cross to aim back to reclaim the 0.8800 mark for the first time since early February.

EUR/GBP daily chart

Technical levels to watch