EUR/GBP Price Analysis: Jumps to fresh 2022 high, descending trend-line breakout in play

• EUR/GBP gained strong follow-through traction on Friday and refreshed the YTD peak.
• Acceptance above the 200-DMA and a descending trend-line breakout favour bulls.
• The cross seems poised to reclaim the 0.8600 mark and continued scaling higher.

The EUR/GBP cross built on the previous day's dovish Bank of England-inspired strong rally and gained traction for the second successive day on Friday. The momentum pushed spot prices to a fresh YTD peak, around the 0.8555-0.8560 region during the early part of the European session.

From a technical perspective, the overnight sustained strength above the very important 200-day SMA was seen as a fresh trigger for bullish traders. A subsequent breakthrough a downward-sloping trend-line extending from April 2021 supports prospects for a further near-term appreciating move.

That said, RSI (14) on the daily chart have moved on the verge of breaking into the overbought territory and warrants some caution. Hence, it will be prudent to wait for some consolidation or modest pullback before traders start positioning for the near-term bullish breakout momentum.

Nevertheless, the EUR/GBP cross seems poised to aim back to reclaim the 0.8600 round-figure mark for the first time since October 2021. Some follow-through buying has the potential to lift spot prices towards the 0.8625 intermediate hurdle en-route the 0.8655-0.8660 area.

On the flip side, the aforementioned descending trend-line resistance breakpoint, just ahead of the 0.8500 psychological mark, now seems to protect the immediate downside. Any further decline is likely to attract fresh buying and remain limited near the 0.8440 region (200-DMA).

The latter should act as a strong base for the EUR/GBP cross, which if broken will negate the positive bias. The subsequent technical selling would expose the next relevant support near the 0.8400 mark, which is followed by the weekly low, around the 0.8365 area.

EUR/GBP daily chart

Key levels to watch