EUR/GBP’s decline from 0.8796 extended lower last week but the cross is staying in range above 0.8666. Initial bias remains neutral this week first. On the downside, decisive break of 0.8666/86 support zone will resume whole fall from 0.9305. In that case, EUR/GBP should target 0.8303 key support next. On the upside, above 0.8749 will reaffirm the strong support from 0.8686 and turn bias to the upside for 0.8796. Break there will target 61.8% retracement of 0.8967 to 0.8666 at 0.8852 and above.
In the bigger picture, there are various ways to interpret price actions from 0.9304 high. But after all, firm break of 0.9304/5 is needed to confirm up trend resumption. Otherwise, range trading will continue with risk of deeper fall. And in that case, EUR/GBP could have a retest on 0.8303. But we’d expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.
In the long term picture, we’re holding on to the view that rise from 0.6935 (2015 low) is resuming the up trend from 0.5680 (2000 low). Hence, after the consolidation from 0.9304 completes, we’d expect another medium term up trend through 0.9799 to 100% projection of 0.5680 to 0.9799 from 0.6935 at 1.1054.
