- EUR/GBP witnessed some fresh selling on Wednesday and erased the previous day’s gains.
- The formation of a descending triangle supports prospects for further near-term weakness.
- A sustained break below the 0.8560 horizontal support will reaffirm the bearish outlook.
The EUR/GBP cross came under some renewed selling pressure on Wednesday and extended the previous day's rejection slide from a downward sloping trend-line resistance. The downward trajectory dragged the cross the 0.8585-80 region, or fresh daily lows during the early European session.
The next relevant support is pegged near the 0.8560 horizontal zone tested earlier this month. This, along with the mentioned trend-line, constitutes the formation of a descending triangle on the daily chart. A convincing break below will set the stage for a further near-term downfall.
Meanwhile, technical indicators on the daily chart are holding in the negative territory and support prospects for an eventual bearish breakdown. That said, it will still be prudent to wait for some follow-through selling below the triangle support before placing aggressive bearish bets.
The EUR/GBP cross might then accelerate the fall towards challenging the key 0.8500 psychological mark. The downward trajectory could further get extended towards 14-month lows, around the 0.8470 region touched in April.
On the flip side, the 0.8600-0.8610 region now seems to act as immediate resistance. This is followed by the descending trendline hurdle, around the 0.8630 region, which if cleared decisively will negate the bearish outlook and prompt some near-term short-covering move.
The subsequent positive move has the potential to lift the EUR/GBP cross beyond an intermediate resistance near the 0.8670 area and allow bulls to aim back to reclaim the 0.8700 round-figure mark.
EUR/GBP daily chart
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