- EUR/GBP added to the overnight losses and remained depressed for the second straight day.
- Weakness below the 0.8560 horizontal support will confirm a descending triangle breakdown.
- Only a sustained move beyond the 0.8640-45 region will negate the near-term bearish outlook.
The EUR/GBP cross extended the previous day's rejection slide from a short-term descending trend-line resistance and witnessed selling for the second consecutive session on Friday. The downward trajectory dragged the cross to one-week lows, around the 0.8570 region during the mid-European session.
The next relevant support is pegged near the 0.8560 horizontal zone tested earlier this month. This, along with the mentioned trend-line, constitutes the formation of a descending triangle on the daily chart. A convincing break below will set the stage for a further near-term depreciating move.
Meanwhile, technical indicators on the daily chart are holding in the negative territory and support prospects for an eventual bearish breakdown. That said, it will still be prudent to wait for some follow-through selling below the triangle support before placing any aggressive bearish bets.
The EUR/GBP cross might then accelerate the fall towards challenging the key 0.8500 psychological mark en-route 14-month lows, around the 0.8470 region touched in April.
On the flip side, the 0.8600 mark now seems to act as immediate strong resistance. Any subsequent positive move has the potential to lift the EUR/GBP cross further, though is likely to run out of the steam near the trend-channel (triangle) resistance, currently around the 0.8640 region.
That said, a sustained move beyond will negate the bearish set-up and prompt some aggressive short-covering move. This, in turn, should push the EUR/GBP cross further beyond an intermediate resistance near the 0.8670 area and allow bulls to aim back to reclaim the 0.8700 round-figure mark.
EUR/GBP daily chart
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Technical levels to watch
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