EUR/GBP Price Analysis: Records fresh four-week highs near 0.8460

The EUR/GBP surged to four-week new highs around 0.8458 on Tuesday, amid a risk-off market sentiment, which sent the British pound tumbling across the board, losing 0.61% vs. the euro, and 1% against the greenback. At the time of writing, the EUR/GBP is trading at 0.8453.

Risk-aversion keeps the GBP as the laggard in the FX space

European and US equities are still on the back foot, trading with losses. The recent China coronavirus outbreak in Shanghai, which extended to Beijing and Mongolia, keeps investors on their toes because, based on China's Covid-19 zero-tolerance, it could trigger another raft of inflation courtesy of supply chain disruptions. Also, escalations in the Ukraine-Russia conflict summed up the dismal market mood.

On Tuesday, the EUR/GBP opened around the 0.8400 figure in the Asian session. However, as European traders took over, the GBP weakened, sending the EUR/GBP rallying from 0.8393 to 0.8456.

EUR/GBP Price Forecast: Technical outlook

The EUR/GBP remains neutral biased. However, it is trading above the 200-day moving average (DMA), which lies at 0.8445, signaling that the bias will shift to neutral-bullish if a daily close above the latter is achieved. A break above 0.8512 would shift the bias to bullish, but solid resistance lies ahead. It is worth noting that the EUR/GBP upside in the last three trading sessions caused a jump in the Relative Strength Index (RSI), but at 64.66, it would provide some upward room for the EUR/GBP if bulls attempt to push prices higher.

With that said, the EUR/GBP's first resistance would be the February 7 daily high at 0.8478. A breach of the latter would expose the 0.8500 figure. Once cleared, the next resistance would be the 1-year-old downslope trendline lying around the 0.8535-50 area.