EUR/GBP Price Analysis: Bulls regain control, and target the 200-hour SMA at 0.8517

• On Wednesday, the EUR/GBP recorded gains of 0.42%, erasing Tuesday’s losses.
• A dampened market mood weighed on the risk-sensitive British pound.
• EUR/GBP Price Forecast: The 1-hour chart depicts the formation of a falling wedge preceded by an uptrend, with the 200-hour SMA as its target.

EUR/GBP recovers some ground after falling towards the 50-day moving average (DMA) at around 0.8396, though it is staging a recovery during the day but faltering to break above the 0.8500 mark, settling at around 0.8470s. At 0.8481, the EUR/GBP sits above the 200, 50, and 100-DMA and is ready to re-test the one-year-old downslope trendline, broken on May 6, though later reclaimed by EUR/GBP bears.

Risk-aversion keeps risk-sensitive currencies like the British pound under pressure. That benefits the shared currency, which despite recording losses against the greenback, its low-yield status vs. the pound, attracts investors as they seek safe-haven protection.

During the overnight session for North American traders, the EUR/GBP opened near the lows of the session, around 0.8440, and rose once EU inflationary readings crossed wires, at the same time that UK’s figures showed that inflation reached 9%. Both news caused a jump near the 0.8500 mark, but EUR bulls could not pierce the figure, retreating towards the 100-hour simple moving average (SMA) at 0.8479.

EUR/GBP Price Forecast: Technical outlook

The 1-hour chart depicts the pair as neutral biased but slightly tilted to the upside. EUR/GBP traders need to be aware of a falling-wedge chart pattern formed after a bullish impulse, meaning that once broken, the EUR/GBP should aim higher, targeting the 200-hour SMA at 0.8517.

However, for that scenario to play out, EUR/GBP traders would need to break above 0.8500. Break above would expose the 200-hour SMA at 0.8517, which, once cleared, would open the door for further gains around the R2 daily pivot at 0.8530, followed by the R3 pivot point at 0.8560.

Key Technical Levels