Bulls challenge a multi-month downtrend line

• EUR / GBP gains a strong continuation to the upside for the second day in a row on Friday.
• The technical setup supports the prospects of a breakout of the downtrend line resistance.
• The emergence of buying near the 0.9140 region should limit any significant decline.

The EUR / GBP cross is extending the strong positive move from the previous day and has continued to gain traction for the second day in a row on Friday. Momentum has pushed the cross to the highest level since late September, around the 0.9175-80 region during the European session.

The president of the European Commission, Ursula von der Leyen, reportedly told EU leaders that the probability of not reaching an agreement is greater than that of an agreement. This, in turn, has sparked some aggressive selling around the British pound and has turned out to be a key factor pushing the EUR / GBP higher.

From a technical perspective, the EUR / GBP cross has now approached a downtrend line. This barrier extends from multi-year highs around the key psychological level of 0.9500 touched in March. In case of breaking decisively it will be seen as a new trigger for the bulls.

Meanwhile, the technical indicators on the daily chart have been gaining positive momentum and are still far from being in overbought territory. The setup supports the prospects for an eventual breakout of trend line resistance and an extension of the current strong bullish move.

Therefore, any pullback towards the previous monthly highs, around the 0.9140 region, could now be seen as a buying opportunity. This should help limit the decline near the round 0.9100 level, which should now act as a solid short-term foundation for the EUR / GBP cross.

EUR / GBP daily chart

EUR / GBP technical levels