Sterling Advances as EUR/GBP Breaks Key Technical Support

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: July 2, 2026

Key Moments

Societe Generale strategists report that EUR/GBP has completed a Head and Shoulders pattern and fallen through its neckline around 0.8610, which is now viewed as initial resistance.
Downside targets for EUR/GBP are identified at 0.8535/0.8520, with scope for a further move toward 0.8475 if selling pressure continues.
Strategists cite GBP/USD outperformance against EUR/USD, M&A flows, a stable UK political landscape, and waning ECB tightening expectations as factors favoring a weaker EUR/GBP.

Technical Breakdown in EUR/GBP

Societe Generale strategists note that EUR/GBP has finalized a Head and Shoulders formation and dropped below its neckline near 0.8610. This zone is now regarded as the first layer of resistance on any rebound.

They emphasize that earlier strength in GBP/USD relative to EUR/USD has already pushed EUR/GBP under this neckline level. Based on this move, analysts identify subsequent downside targets at 0.8535/0.8520, with an additional objective at 0.8475 if the downward momentum remains intact.

Head and Shoulders Pattern Points to Further Weakness

The strategists explain that EUR/GBP had been forming a Head and Shoulders configuration over recent months, a pattern that indicated potential downside risks for the cross. With the neckline now broken, they see scope for a more pronounced correction.

They state: “EUR/GBP had been tracing out a Head and Shoulders pattern over the past few months, signalling potential downside risk. The pair has now broken below the neckline of this formation, denoting possibility of a deeper pullback.”

In their view, the neckline around 0.8610 has shifted from support to resistance. As they put it: “The neckline, located around 0.8610, may now serve as the first resistance. If EUR/GBP fails to cross this hurdle, the current decline could extend. The next objectives could be located at projections of 0.8535/0.8520 and 0.8475.”

Market Drivers: FX Performance, Flows, and Policy Expectations

Societe Generale links the recent EUR/GBP weakness to relative moves in major currency pairs. They remark: “In FX, the outperformance of GBP/USD vs EUR/USD deflated EUR/GBP to a daily close below 0.8610/00, forcing short covering in the pound.”

Beyond pure price action, the strategists point to several underlying factors influencing the cross. They write: “The combination of M&A flows, the stable UK political backdrop and ebbing of ECB tightening prospects could guide the cross towards next support at 0.8535/0.8520.”

Monetary Policy Commentary from the Bank of England

The analysis also references remarks from Bank of England Governor Andrew Bailey. According to the strategists: “Governor Bailey, speaking in Sintra, characterised the pre-conflict pricing of two rate cuts this year as “not unreasonable” in the context of the softening economy. However, he added “that was off the table in March and is off the table at the moment.””