Plummets to fresh multi-month lows around 0.8670 region

• EUR / GBP has fallen under new selling pressure on Thursday and has reached new multi-month lows.
• The technical setup remains tilted in favor of the bears and supports the prospects for a further decline.

The EUR / GBP cross has faced rejection near the round 0.8700 level and witnessed a sharp intraday turn on Thursday. The subsequent sell has dragged the cross to fresh multi-month lows, around the 0.8670 region, during the first half of the European session and is due to a sudden spike in demand for the British pound.

From a technical perspective, the EUR / GBP cross has been trending down for the past two months within a downtrend channel. The technical setup points to a well-established short-term downtrend and supports the prospects for further declines. That said, oversold conditions on short-term charts warrant some caution for bears.

Therefore, it will be wise to wait for some consolidation before positioning for any other short-term bearish moves. However, the EUR / GBP cross remains vulnerable to prolong the current downward movement. Therefore, some continuation weakness towards the trend channel support, around the 0.8645 region, seems like a clear possibility.

On the other hand, intraday highs, around the round 0.8700 level, now appear to act as a strong immediate barrier. Any subsequent movement could be seen as a selling opportunity near the 0.8740-45 region, which coincides with the upper limit of the aforementioned trend channel and limits any further gains for the EUR / GBP cross.

Only a sustained force above such resistance will negate the short-term bearish bias and could trigger an aggressive short-hedging move. Momentum should help the EUR / GBP cross point towards recovering the round 0.8800 level.

EUR / GBP 4-hour chart

EUR / GBP technical levels