EUR/GBP Price Forecast: Eases from 0.8575 resistance with the bullish bias intact

The Euro (EUR) is nursing moderate losses against the British Pound (GBP) on Wednesday, as bulls failed to find acceptance above the 0.8575 resistance area on Tuesday. The pair, however, remains within the upper range of the 0.8500s with the near-term bullish bias intact, and the focus shifting towards the Bank of England’s (BoE) monetary policy meeting, due on Thursday.

Rabobank’s FX strategists warn that the Pound could come under pressure as markets reassess the UK policy outlook. They argue that “the potential for disappointment over a lack of rate rises from the Bank this year, coupled with the likelihood of political friction over budget cuts,” may turn market sentiment less supportive for sterling.

Technical Analysis: Bulls target 0.8575 and the 0.8600 area

EUR/GBP trades at 0.8566, hovering in the upper half of a bullish channel. Momentum indicators are in positive territory, with the Relative Strength Index (14) around 64, after pulling back from overbought levels, and the Moving Average Convergence Divergence (MACD) histogram at slightly positive levels, hinting that upside pressure is still intact.

Immediate resistance is in the area between the mentioned 0.8575 area (July 2, 3, and 29 highs) and the channel cap, now around 0.8580. Above these levels, the next target is the late-June lows, around 0.8605.

On the downside, first support emerges at the 0.8550 area where Tuesday's lows meet the channel base. Below here, the July 23 low, near 0.8530, and July 17 and 20 highs in the 0.8510-0.8515 area are expected to challenge bears.