EUR/GBP Price Analysis: Gains traction above the 0.8570 mark, within descending trend channel

The EUR/GBP cross gains momentum above the mid-0.8500s during the early European session on Thursday. The cross currently trades near 0.8576, unchanged for the day.

The latest data revealed on Thursday that German Industrial Production (IP) for July fell -2.1% YoY from a 1.5% drop (revised from a 1.5% drop) in the previous month. On a monthly basis, the figure dropped 0.8% versus a 1.4% decline in June and below the expectation of a 0.5% drop. However, the Pound Sterling (GBP) is weakened against the Euro as the Bank of England (BoE) Governor Andrew Bailey's dovish remark on Wednesday that the central bank is much closer to ending its hiking cycle.

From a technical perspective, EUR/GBP trades within a descending trend channel since the middle of June on the four-hour chart. That said, That said, the path of least resistance for the cross is to the upside as EUR/GBP holds above the 50- and 100-hour Exponential Moving Averages (EMAs).

The critical resistance level for the cross is seen at 0.8600, representing a psychological round mark and a high of August 28. The next barrier to watch is 0.8626 (the upper boundary of a descending trend channel) en route to a high of August 11 at 0.8670 and finally near a high of July 19 at 0.8700.

On the flip side, the initial support level is seen at 0.8563 (50-hour EMA). The next downside stop is located at 0.8540 (a low of September 4). The additional downside filter is located at 0.8524 (a low of September 5). The key contention will emerge at 0.8500, portraying a lower limit of a descending trend channel and a psychological figure.

It’s worth noting that the Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) stand in bullish territory, supporting the buyers for now.
 

EUR/GBP four-hour chart