EUR/GBP extends its recovery attempt on Friday, rising for a second consecutive trading session as short-covering activity emerges after the sharp midweek downside move. The cross is trading near 0.8501, recovering marginally from recent lows, but the broader technical structure remains dominated by bearish momentum.
South Quantum Group's experts provide a deeper analysis of this topic in the article below.
Despite the latest rebound, EUR/GBP remains positioned for a fourth consecutive weekly decline, highlighting persistent weakness after the pair broke below the important 0.8600 support zone on July 1. The breakdown below this multi-month technical floor accelerated selling pressure and pushed the exchange rate toward a one-year low.
The current price action indicates that buyers are attempting to stabilize the market, but sellers continue to maintain control as long as EUR/GBP remains below its major Simple Moving Averages (SMAs). The overall trend structure continues to favor further downside risks unless the pair successfully reclaims key resistance levels.
Moving Averages Confirm Strong Downtrend Structure
From a technical perspective, EUR/GBP is trading significantly below its major trend indicators. On the daily chart, the pair is positioned around 0.8504, while the 50-day SMA, 100-day SMA, and 200-day SMA remain considerably higher.
The 50-day SMA is located near 0.8617, the 100-day SMA stands around 0.8645, and the 200-day SMA is positioned near 0.8688. This alignment creates a broad resistance cluster between 0.8617 and 0.8688, limiting the probability of a sustained bullish recovery.
The fact that the current price trades below all three major moving averages confirms a bearish market structure. The downward slope of shorter-term averages also reflects continued selling pressure, while the 200-day SMA remains a significant long-term barrier for any trend reversal attempt.
A recovery above 0.8600 would represent the first technical improvement, but EUR/GBP would still need to break above the 50-day SMA at 0.8617 and the 100-day SMA at 0.8645 to challenge the current bearish bias.
RSI Signals Oversold Conditions but Momentum Remains Weak
Momentum indicators suggest that selling pressure has become increasingly stretched. The Relative Strength Index (RSI) is currently trading below 33, approaching the key oversold threshold at 30.
The RSI reading indicates that EUR/GBP is entering a zone where a technical rebound becomes possible, although a bullish reversal remains unconfirmed as the broader trend stays negative.
The Average Directional Index (ADX) adds confirmation of trend strength, standing near 31. An ADX above 25 generally signals a strong directional trend, keeping the bearish phase active.
The combination of an oversold RSI and elevated ADX creates a mixed picture, with downside momentum slowing.
Resistance Levels Define Recovery Potential
On the upside, EUR/GBP faces immediate resistance near 0.8550. A break above this level could encourage additional short covering and allow the pair to extend its corrective rebound.
The next major obstacle remains the former support area at 0.8600. This level is now acting as a key technical resistance zone after the recent breakdown. A sustained move above 0.8600 would weaken the bearish structure and signal improving buying momentum.
Above this level, traders will monitor the 50-day SMA at 0.8617, followed by the 100-day SMA at 0.8645. The strongest resistance remains at the 200-day SMA near 0.8688, which represents a major long-term trend barrier.
Failure to break above these resistance levels would likely reinforce the view that upward movements are only temporary corrective rallies within a broader downtrend.
Downside Targets Focus on 0.8450 Support
On the downside, the next important technical support level is located near 0.8450. This zone represents the immediate bearish target if selling pressure resumes.
A confirmed break below 0.8450 would strengthen the negative outlook and potentially expose EUR/GBP to additional declines as sellers target new yearly lows.
The current technical setup shows that EUR/GBP remains vulnerable below 0.8600, with moving averages, momentum indicators, and price structure all favoring sellers. Although the RSI near 33 suggests limited downside momentum in the short term, the ADX above 30 indicates that the broader bearish trend remains intact.
EUR/GBP Forecast: Bearish Trend Intact Despite Short-Term Recovery
The technical outlook for EUR/GBP remains bearish while the pair trades below the 0.8600 resistance zone and below its major moving averages. The recent move toward 0.8500 reflects short-covering rather than a confirmed trend reversal.
A move above 0.8600–0.8617 would be required to improve the technical outlook, while a break below 0.8450 would likely accelerate the existing decline.
For now, sellers retain control, with the market focused on whether oversold conditions can trigger a stronger recovery or whether renewed selling pressure pushes EUR/GBP toward fresh lows.
