EUR/GBP descends in channel

Source: Dukascopy Bank SA


Throughout 2023 the Euro has been descending against the Pound in a channel down pattern. From a fundamental perspective it captures the fact that the European Central Bank has been lagging behind the Bank of England in hiking interest rates. The GBP strengthens, as safe Pound investments pay more and attract more demand.

Most recently, the pair has revealed support and resistance. Support is found in the lower trend line of the channel pattern and the late 2022 low level at 0.8550. In addition, the 0.8520/0.8525 range has acted as support in mid-June. Resistance is provided by the 50-day simple moving average above 0.8600 and a resistance zone at 0.8613/0.8662.

In the case of a decline below the 0.8520 level, the 0.8500 mark could act as support. Further below, note the lower trend line of the 2023 channel down pattern.

On the other hand, a recovery of the Euro against the Pound would have to break the 0.8613/0.8662 range. If it is not done by August, the upper trend line of the channel will provide additional resistance. A failure of these levels to hold the pair down is expected to result in a surge up to the 0.8720/0.8735 range and the 200-day simple moving average.
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