EUR/GBP Price Forecast: Rejection at 0.8500 leaves yearly low at 0.8455 exposed

The Euro (EUR) extends losses against the British Pound (GBP) on Wednesday, on track to complete a nearly 1.6% decline in a nine-day losing streak. A mild EUR/GBP recovery attempt found sellers at the 0.8500 area on Tuesday, sending the pair back to the 0.8475 area, with the 16-month low, at 0.8455, on sight.

The Euro bounced up from levels just above the year-to-date lows on Tuesday as France’s benchmark 10-year OAT yields fell 17 basis points, following far-right Marine Le Pen’s plan to slash France’s government costs by 140 billion over the next five years. Le Pen is the best positioned to win next year’s presidential elections, and her comments provided some confidence to markets and triggered a rebound on Euro crosses.

Euro’s strength, however, has been short-lived. Fresh attacks of the Iran-backed Houthis in Saudi Arabia have pushed Oil Prices higher, with Brent Oil crossing the key $100 level, and adding pressure on the Eurozone’s economy. Against this background, the positive surprise in German Industrial Production data has gone practically unnoticed.

Technical Analysis: Key support at the 0.8455 area remains on the bears' target

EUR/GBP trades at 0.8473, maintaining the bearish structure from late September highs in place. Momentum indicators on the 4-hour charts are mixed, with the Moving Average Convergence Divergence (MACD) still at marginally positive levels, although the Relative Strength Index (14), at 30.8, is just above oversold territory, which suggests that upside attempts are likely to face pressure.

Tuesday's rejection at 0.8493 leaves the mentioned 16-month low, at 0.8455 (July 15 low), exposed. Further down, the early June 2025 lows, around 0.8410, seem like a plausible target. On the upside, a confirmation above 0.8500 would ease bearish pressure and shift the focus towards the October 2 high at 0.8527, ahead of a previous support area, now turned resistance around 0.8550.