EUR/GBP Price Analysis: Bears maintain control and push the cross to fresh multi-month lows
- The EUR/GBP slipped to 0.8520, its lowest level since August 2023 recording 0.23% losses.
- The daily chart reveals RSI nearing oversold territory, hinting at intense selling pressure.
- If indicators hit oversold conditions a technical correction may be on the horizon.
In Monday's session, the EUR/GBP pair is trading at 0.8520, reflecting a 0.23% decline. It seems the bears have a firm grip on the daily chart, exhibiting a bearish bias for the cross. While bears retain control, the four-hour indicators hint at a near oversold state, suggesting a possible shift in momentum could be looming.
Fundamentally speaking, the pair faces significant pressure due to diverging monetary policy tones by the European Central Bank (ECB) and the Bank of England (BoE). For the rest of the week, investors will take a close look at the BoE’s decision on Thursday as well as key inflation figures from the Eurozone from January as the divergences may expand and apply further pressure on the cross.
EUR/GBP levels to watch
The daily chart displays a bearish environment with the cross trading below its three major Simple Moving Averages (SMAs). Such a situation indicates the bears are currently exerting dominance over the pair. In addition, the Relative Strength Index (RSI) also corroborates this dominance, standing close to oversold levels, hence suggesting that selling momentum is prominent. In the face of rising red bars on the Moving Average Convergence Divergence (MACD), this further reinforces the bearish outlook.
Shifting the focus on the shorter timeframe, the four-hour chart provides the same outlook. Similar to the daily chart, here too, the RSI is almost touching the oversold threshold. This attribute is a secondary confirmation of the stronger selling momentum. Moreover, the red bars of MACD on the four-hour chart are accentuating, aligning with the prevalent bearish view. That being said,the near oversold indications on both timeframes might imply a potential corrective bounce back, hence traders should maintain caution.
EUR/GBP daily chart
