EUR/GBP Fails to Break Above Ascending Channel

The EUR/GBP currency pair has been showing a bullish structure but is struggling to return to its ascending channel. The pair's price has bounced up from lows around 0.8540, but remains capped below 0.8570, the bottom of the channel. Analysts at TD Securities observe that last week's decision by the Bank of England suggests that most committee members are comfortable keeping interest rates on hold due to lack of clear inflation data.

Failure to return above 0.8570 might encourage bears to retest the 0.8545 area, which capped bears on Friday and July 28. On the topside, a confirmation above 0.8570 would expose the July 30 high at 0.8585. Further up, the late June lows just above 0.8600 emerge as the next resistance area.

The Manufacturing Purchasing Managers Index (PMI) figures for July have been revised lower in the UK and Eurozone, although the latter shows an improvement from June. The uncertainty about the BoE's monetary policy remains a significant hurdle for GBP recovery.