EUR/GBP Consolidation Continues Amid Mixed Momentum Signals
The EUR/GBP exchange rate has been experiencing mixed momentum signals, suggesting that it may be due for more consolidation. The Euro (EUR) edged higher against the British Pound (GBP) on Friday, but price action over the past ten trading days has been confined to a narrow range, indicating that the mid-July rebound from below 0.8500 is losing steam. Strategists at Rabobank believe that the recent shift in market expectations towards steady policy from the Bank of England this year, coupled with heightened nervousness ahead of the October budget, points to scope for downside pressure on the pound as the summer draws to a close.
The bank favors buying EUR/GBP on dips to the 0.8550 area and suggests that a break above the recent high in the 0.8588 region could increase upside potential. From a technical perspective, the 50-day Simple Moving Average (SMA) at 0.8584 caps the immediate upside, while momentum indicators offer mixed signals. The Relative Strength Index (RSI) stands at 54, reflecting a modest bullish bias, but the fading green histogram suggests that the recent recovery lacks enough momentum to decisively clear the moving averages for now.
On the downside, immediate support is located at the horizontal level of 0.8550, followed by the psychological mark of 0.8500. A decisive break below the latter would expose the year-to-date low near 0.8455.