EUR/GBP Price Analysis: Further downside hinges on 0.8540 break and ECB

• EUR/GBP stays pressured within seven-week-old falling wedge, approaches weekly support.
• RSI conditions suggest limited downside room, highlight 0.8520 as additional support.
• 100-SMA can prod bullish wedge confirmation before giving control to buyers.
• ECB is likely to announce 0.25% rate hike but Lagarde Speech will be crucial to watch.

EUR/GBP fades bounce off the yearly low, marked earlier in the week, as it drops to 0.8550 amid the initial hours of Thursday’s European session. In doing so, the cross-currency pair braces for the European Central Bank (ECB) Monetary Policy Meeting by approaching a short-term key support.

Also read: EUR/USD trades with modest intraday losses, holds above 1.0800 ahead of ECB

That said, the quote’s failure to keep the bounce off one-week-old rising support line, near 0.8540 by the press time, contrasts with the downbeat RSI (14) line.

The same suggests limited downside room for the quote, which in turn highlights the bottom line of a falling wedge bullish chart pattern comprising levels marked since late April.

As a result, the EUR/GBP pair’s latest weakness remains elusive beyond 0.8540 while a clear break of the said trend line support isn’t also an assurance to the bears as the stated wedge’s lower line, close to 0.8520 at the latest, offers an extra filter towards the south.

On the contrary, the month-start bottom of 0.8567 restricts immediate upside of the EUR/GBP pair ahead of the falling wedge’s top line, near to the 0.8600 round figure as we write.

It should be noted that the bullish chart pattern’s confirmation, via 0.8600 breakout, needs validation from the 100-SMA level surrounding 0.8620 to suggest further advances of the pair.

EUR/GBP: Four-hour chart

Trend: Limited downside expected