EUR/GBP approaches multi-month highs as bulls step in

• The EUR/GBP rose to 0.8740, seeing 0.40% gains, clearing weekly losses.
• Bulls have room to test the 0.8775 high, struck last week.
• The cross trades above its main SMAs.

The EUR/GBP trades with strong gains around the 0.8740 area with the pair clearing Mondays and Tuesdays' losses. The next target stands at 0.8775, which would set a high since May. On the fundamental side, soft inflation figures from October from the UK reported during the European sessions made the GBP face severe selling pressure which allowed the cross bulls to gain ground.

On the daily chart, the EUR/GBP holds a bullish technical bias as the buyers gather momentum and seize control in the short term. The Relative Strength Index (RSI) shows an upward trend above its midline, while the Moving Average Convergence (MACD) presents stagnant red bars. On the four-hour chart, indicators rose near overbought conditions, so traders should not take a slight technical correction off the table to consolidate losses.

Evaluating the broader scale technical outlook, the pair now is above the 20,100,200-day Simple Moving Average (SMA), suggesting that the bulls are also firmly in control of the larger time frames.

Supports: 0.8755, 0.8770,0.8780.
Resistances: 0.8730, 0.8710 (20-day SMA),0.8700.

EUR/GBP daily chart