Key Moments
- EUR/GBP trades near 0.8556, close to two-week lows after a sharp reversal from the 0.8575-0.8585 resistance band.
- Key technical support is clustered around 0.8545 and 0.8531, with a break lower seen as confirming a multiple-top pattern.
- Euro underperforms the Pound as a risk-off tone and geopolitical tensions weigh on the single currency, despite fading immediate selling pressure.
EUR/GBP Holds Near Lows as Risk Sentiment Weighs on Euro
EUR/GBP is trading close to two-week lows around the 0.8540 region after reversing from 0.8575 on Friday. The Euro has weakened more than the British Pound in response to Federal Reserve Chairman Kevin Warsh’s hawkish tone at the Jackson Hole event. On a broader view, the cross continues to oscillate within a defined range, with critical support centered near 0.8530.
On Monday, the Euro is struggling to find clear direction against the Pound following Friday’s sharp pullback, with sellers focusing on the lower end of the recent two-week range just below 0.8550. While immediate downside pressure appears to have moderated, a cautious, risk-off backdrop – driven by heightened tensions in Iran and rising crude oil prices – is restricting attempts by the Euro to mount a sustained rebound.
Fed Commentary Sparks Repricing
The pair sold off sharply on Friday after Federal Reserve (Fed) Chairman Kevin Warsh reinforced expectations that interest rate increases could be forthcoming, stating that policymakers “have work to do” on inflation. Market participants interpreted these remarks as reaffirming the Fed’s determination to return inflation to its 2% objective, even though Warsh did not explicitly reference rate hikes in his address.
Technical Outlook: Bears Watching 0.8531 Support
EUR/GBP is currently quoted at 0.8556, roughly in the middle of its recent trading corridor. The swift rejection from levels around the 0.8580 resistance area, combined with a lower high formed on Friday, has encouraged bearish positioning.
On the 4-hour chart, momentum gauges have shifted into negative territory. The Relative Strength Index (14) is hovering near 40, pointing to mild bearish momentum, while the Moving Average Convergence Divergence (MACD) has moved below the zero line. This configuration signals fading upside strength rather than a decisive directional breakdown at this stage.
On the downside, selling pressure is expected to encounter an initial test at the August 25 low near 0.8545. More importantly, the August 12 trough at 0.8531 is identified as a key support level. A sustained move below 0.8531 would confirm a multiple-top pattern formed between 0.8575 and 0.8585 and would refocus market attention on the lows recorded on July 20 and 21 at 0.8485 and 0.8490, respectively.
On the upside, Friday’s high at 0.8576, along with the July and August peak around 0.8585, is expected to present substantial resistance for buyers. A break above this cluster would open the way toward a prior support band marginally above 0.8600, defined by the lows recorded on June 24 and June 30.
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