EUR/GBP licks its wounds near 0.8745 as it struggles to recover from the monthly low during early Friday. In doing so, the cross-currency pair consolidates the biggest weekly losses since late October ahead of a speech from the European Central Bank (ECB) President Christine Lagarde and the UK Retail Sales for December.

Technically, the EUR/GBP bounces off a convergence of the 50-DMA and the 100-DMA, around 0.8730 by the press time. Even so, bearish MACD signals favor the pair sellers.

That said, the quote’s latest rebound could gain the market’s attention if it manages to cross the one-month-old horizontal resistance, previous support near 0.8770.

Following that, a gradual run-up towards a 10-week-old ascending resistance line, close to 0.8910 by the press time, can’t be ruled out. However, the November 2022 high near 0.8830 could act as an intermediate halt during the anticipated advances.

EUR/GBP demonstrated a vertical sell-off after a breakdown of the Head and Shoulder chart pattern formed on an hourly scale, which triggered volatility and resulted in a bearish reversal. The cross is expected to weaken further after breaking below the horizontal support plotted from December 16 high at 0.8772.

Meanwhile, a daily closing below the 0.8730 support confluence could quickly drag the EUR/GBP price to the 0.8700 threshold.

However, an ascending support line from early August 2022, near 0.8630 at the latest, could challenge the pair sellers afterward.

It should be noted that the EUR/GBP weakness past 0.8630 won’t hesitate to challenge the previous monthly low near 0.8550.

EURGBP to extend its correction on intraday scale

Jan 22 2023