EUR/GBP eases to fresh seven-week low as sellers eye key support level

Technical Analysis

Author: Justin Low | eurgbp

EUR/GBP falls to 0.8900, the lowest level since 26 November

EUR/GBP D1 13-01
As the pound keeps firmer in trading this week, EUR/GBP is being dragged to a fresh seven-week low as price falls to 0.8900 as sellers extend a break below the 200-day moving average (blue line) from yesterday.

The pair has struggled for any upside since the Brexit trade deal was wrapped up at the end of December, with the push higher in the new year meeting resistance at around 0.9085-93 before backing off and falling back under the key daily moving averages.

That puts sellers in control of the pair now and they are eyeing a potential move towards key support at around 0.8866-67, which has limited downside since June last year.

Despite the UK economic outlook shaping up to be rather concerning to start the new year amid the virus surge and the realities of Brexit, the pound has been rather resilient.

Even with the slight dollar reprieve as of late, cable is trading up today near 4 January high of 1.3704 as buyers look for a firm break above the 1.3700 handle.

I'm still not all too convinced about the pound's prospects but it will be tough to ignore a technical break in EUR/GBP below 0.8866-67 if and when we do get there.

This is either going to play out as a last gasp push for the pound before the beginning of a struggling period, or the supposedly 'cheap' valuation in the quid is reason enough for the market to sustain a move higher.
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