- EUR/GBP has pulled back to key support after rallying sharply on Thursday.
- The pair has probably changed trend but a break above the October 3 high would confirm a bullish reversal.
EUR/GBP pulls back down to the base of its multi-month range at 0.8380 after shooting higher on Thursday, October 3, as a result of comments made by the Governor of the Bank of England (BoE) Andrew Bailey.
The pair has probably reversed its prior downtrending bias and is now starting a new short-term uptrend, however, a break above the October 3 high of 0.8434 would provide confirmation of such a reversal, and a probable extension higher thereafter.
EUR/GBP Daily Chart
Assuming a bullish scenario, EUR/GBP will probably reach the key resistance level at the cluster of Moving Averages in the 0.8450s, as well as the high of the consolidation channel. The next target above that is the green 200-day Simple Moving Average (SMA) at 0.8510.
The blue Moving Average Convergence Divergence (MACD) momentum indicator has crossed above its red signal line, further signaling a probable change in the trend.
It would require a break below 0.8311 and the October 1 lows to reconfirm bearish bets and suggest the medium-term bear trend was reasserting itself. Such a move would then be expected to fall to the next downside target at 0.8284 (Fibonacci 78.6% extrapolation of the August decline) followed by 0.8236 (100% extrapolation of the same decline).
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