Climb two-month highs and look for a move past the 200-day SMA

• EUR / GBP finds buying lower on Wednesday and turns positive for the second day in a row.
• The previous day’s break through the horizontal barrier at 0.8615 supports the prospects for additional gains.
• The bullish technical indicators on the daily chart add credibility to the short-term positive bias.

The EUR / GBP cross has reversed a decline at the start of the European session and turned positive for the second day in a row on Wednesday. Momentum has led the cross to two-month highs, around the 0.8640 region in the past hour, although it has lacked any continuation.

The relative underperformance of the British pound comes amid growing signs of the UK fuel crisis due to a post-Brexit truck driver shortage. However, a broad strength of the US dollar has continued to weigh on the common currency and has limited any further gains for the EUR / GBP cross.

From a technical perspective, the convincing breakout the previous day through horizontal resistance near the 0.8615 region has been seen as a key trigger for the bulls. However, the overbought RSI on the 1-hour charts has prevented investors from positioning for any further bullish movement and has capped the EUR / GBP cross just below the 200-day SMA.

On the daily chart, the oscillators are still far from overbought territory and support the prospects for a move beyond the technically significant moving average. This, in turn, will set the stage to move towards the July monthly highs around the 0.8670 region on the way to the round 0.8700 level.

On the other hand, any pullback now could be seen as a buying opportunity and remain limited near the mentioned resistance breakout point. This is closely followed by the 0.8600 level, which if decisively broken could trigger some technical selling and drag the EUR / GBP cross towards the 0.8550-45 support zone.

EUR / GBP daily chart

EUR / GBP technical levels