EUR/GBP picks up bids to 0.8845 as bulls poke intraday high, as well as the weekly top, heading into Wednesday’s European session. In doing so, the cross-currency pair rises for the fourth consecutive day after reversing from the 50% Fibonacci retracement of its run-up from early December to January 13.

In addition to a successful rebound from the key Fibonacci retracement level of 0.8722, the EUR/GBP pair’s ability to cross the 100-SMA hurdle, as well as the bullish MACD signals, favor the bulls.

It should be noted, however, that a downward-sloping resistance line from January 13, close to 0.8860 at the latest, guards the quote’s immediate upside. The EUR/GBP is also hovering at a critical area including 0.8810/15 which contains the 20-day Simple Moving Average. If it manages to consolidate above, the Euro could gain momentum toward the next resistance at 0.8855/60, the last protection for another test of 0.8895/0.8900.

That said, the quote’s run-up beyond 0.8860 could enable the EUR/GBP bulls to refresh the monthly high, currently around 0.8900. In that case, the 61.8% Fibonacci Expansion (FE) of its moves between December 01, 2022, and January 13, 2023, close to 0.8955, will gain the market’s attention.

Alternatively, pullback moves may initially aim for the 100-SMA level surrounding 0.8815 ahead of targeting the 0.8800 round figure.

Following that, the 50% Fibonacci retracement level of 0.8722 should lure the EUR/GBP bears.

In a case where the quote remains bearish past 0.8722, the 61.8% Fibonacci retracement level near 0.8680, also known as the “golden ratio”, will be crucial to watch.

Further upside expected

Jan 25 2023