The EUR/GBP cross is retreating from the 0.8575 resistance zone, yet the broader bullish bias remains intact, according to the latest technical analysis from FXStreet. Traders are watching to see if the pullback is a temporary breather or the start of a deeper correction. With the pair holding above key support levels, the market's upward momentum is still alive.

Why EUR/GBP is Easing from Resistance

The recent decline from the 0.8575 level comes as profit-taking emerges after a run-up. This resistance area has acted as a ceiling in the past, and sellers are testing the market's conviction. However, the pullback is seen as a natural part of a bullish trend, allowing the pair to consolidate before the next leg higher.

Technical indicators suggest that the overall structure remains positive. The pair is trading above its short-term moving averages, and the Relative Strength Index (RSI) has cooled from overbought levels, giving room for further upside. This combination often signals that the correction is temporary rather than a reversal.

Key Levels to Watch

  • Immediate support: The 0.8530–0.8540 zone, which was previous resistance turned support.
  • Major support: The 0.8500 psychological level, coinciding with the 50-day moving average.
  • Upside target: A break above 0.8575 could open the door to 0.8600 and beyond.

Fundamental Drivers Behind the Bullish Bias

The bullish case for EUR/GBP is underpinned by divergent monetary policy expectations. The European Central Bank (ECB) has signaled a more hawkish stance, while the Bank of England (BoE) is seen as potentially pausing its tightening cycle. This interest rate differential favors the euro, providing a tailwind for the cross.

Additionally, economic data from the eurozone has been resilient, while the UK faces headwinds from sluggish growth and political uncertainty. These factors combine to keep the pair's bias tilted upward, despite the current pullback.

"The underlying trend is still supportive for EUR/GBP, and any dips are likely to be bought," noted analysts.

Technical Outlook: Bullish Signals Remain

From a technical perspective, the pair is forming higher highs and higher lows on the daily chart, a classic bullish pattern. The recent pullback is holding above the 0.8550 level, which is a positive sign. A close below 0.8500 would weaken the bullish case, but that appears unlikely in the near term.

Momentum oscillators are also turning back up, with the MACD histogram showing signs of contracting after a bearish crossover. If the pair can reclaim the 0.8575 level on a closing basis, it would confirm the resumption of the uptrend.

What Could Change the Picture?

  • Surprise BoE rate hike: A hawkish shift from the BoE would boost the pound and pressure EUR/GBP.
  • Weak eurozone data: A sharp slowdown in the euro area could undermine the euro.
  • Risk-off sentiment: A global risk-off move typically supports the pound, as it is a more liquid currency.

Conclusion: Bullish Bias Intact

While EUR/GBP is easing from the 0.8575 resistance, the bullish bias remains intact. Traders should watch for support at 0.8530 and 0.8500, with a potential retest of 0.8575 on the upside. The fundamental backdrop and technical structure both favor the euro in the medium term, but a break below 0.8500 would signal a deeper correction.

As always, risk management is crucial. The forex market is volatile, and unexpected news can shift the outlook quickly. Stay informed and adjust your positions accordingly.

Key Takeaways

  • EUR/GBP is pulling back from 0.8575, but the bullish trend is still intact.
  • Support levels to watch: 0.8530 and 0.8500.
  • Monetary policy divergence between the ECB and BoE supports the euro.
  • A close above 0.8575 would confirm further upside potential.
  • A break below 0.8500 would negate the bullish bias.