Vulnerable below 0.9000, two-week lows

• EUR / GBP fell to more than two-week lows amid strong buying around the British pound.
• The setup favors bearish trading and supports the prospects for further weakness.
• Recovery attempts could remain limited near the break point of the 0.9050 confluence support.

The crossing EUR/GBP It weakened further below the 0.9000 psychological level and fell to lows of more than two weeks during the middle of the European session amid hopes for a last-minute Brexit deal. The British pound maintained its strong supply tone and had a rather subdued reaction after the Bank of England announced its latest monetary policy decision.

Meanwhile, the EUR / GBP cross, so far, has managed to defend the static support near the 0.8980 region, which has been holding since the beginning of this month. The aforementioned region coincides with the very important 200-day SMA, which if decisively broken will lay the groundwork for an extension of the recent sharp pullback from the nearly three-month highs set last Friday.

That said, the acceptance below the 61.8% Fibonacci level of the recent strong positive move to 0.8867-0.9230 may have already set the stage for further weakness. The negative outlook is reinforced by the overnight break below the 0.9050 confluence support, comprising a three-week-plus rising trend line and 50% Fibonacci.

An eventual dip below the 0.8980 support will now be seen as a new trigger for bearish traders and will make the EUR / GBP cross vulnerable to accelerate the decline and test the 0.8900 level. The downward trajectory could extend further and drag the cross further towards the November monthly swing lows support near the 0.8865-60 zone.

On the other hand, any recovery attempt above 0.9000 (Fibonacci Level 61.8%) could now be seen as a selling opportunity. This, in turn, should put a cap on the upside for the EUR / GBP close to the breaking point of the mentioned confluence support, now turned into resistance, near 0.9050.

4 hour chart

Technical levels