EUR/GBP Price Analysis: Corrective bounce approach 0.8890-95 resistance confluence, UK GDP eyed
- EUR/GBP snaps four-day downtrend ahead of the preliminary readings of the UK Q4 GDP.
- Key SMA confluence put a floor under the prices but downbeat oscillators keep sellers hopeful.
- Convergence of weekly descending trend line and monthly horizontal resistance area highlight 0.8890-95 as the key hurdle for bulls.
EUR/GBP picks up bids to pare weekly losses around 0.8865, extending the previous day’s rebound from the one-week low during early Friday. In doing so, the cross-currency pair snaps a four-day downtrend ahead of the preliminary readings of the UK’s fourth quarter (Q4) Gross Domestic Product (GDP) data.
Also read: UK GDP Preview: Growth to stagnate but recession narrowly averted
Other than the pre-data moves, the convergence of the 100-SMA and the 200-SMA, close to 0.8835 by the press time, also challenge the downside bias.
However, bearish MACD signals and a downward trajectory from the last Friday, as portrayed by the short-term descending trend line, tease sellers ahead of the key UK data. Adding strength to the downside bias could be the sluggish RSI (14).
That said, the aforementioned resistance line joins a one-month-old horizontal area to challenge the EUR/GBP bulls around 0.8890-95.
Also acting as an upside filter is the 0.8900 round figure, a break of which could propel prices towards the monthly high surrounding 0.8980 and then to the 0.9000 round figure.
On the flip side, the stated SMA confluence near 0.8835 becomes crucial support for the EUR/GBP bears to watch during the quote’s fresh downside.
Following that, an ascending support line from January 19, near .8820, holds the gate for the EUR/GBP sellers.
EUR/GBP: Four-hour chart
Trend: Limited recovery expected