The euro currency is still struggling for direction against the British pound below the 0.8600 level, as the pair takes a backseat to big moves surrounding US dollar based pairs.
Not much is clearly separating the euro and the British pound currency at the moment in terms of fundamentals. This is evident as both are currently under pressure against the US dollar and the Japanese yen currencies.
Both the UK and eurozone economies contracted in the growth department last quarter. German economic activity is starting to pick-up alongside the United Kingdom’s so there is no clear winner or divergence in fundamentals at this stage.
In terms of each nations stock markets, the FTSE250 is hitting all-time highs, while the CAC40 and ITA40 are close to all-time highs. The GER30 is also on the verge of breaking into a much higher price range.
Something that is separating the traders right now is sentiment. The ActivTrader market sentiment tool is showing that traders are 83 percent bullish towards the EURGBP pair at this moment in time.
This is a strong one-way trading bias, and due to the fact that retail traders are often wrong, it does suggest that the overall down trend is likely to continue. It is also noteworthy that the EURGBP pair trades under its 200-day moving average, meaning the trend is still bearish.
EURGBP Short-term Technical Analysis
The four-hour time frame shows that a bearish head and shoulders pattern continues to loom over the EURGBP pair. Sellers need a confirmed breakout under the 0.8580 level to activate the pattern.
Looking at the overall size of the pattern the EURGBP pair could fall towards the 0.8480 level. A move above the 0.8680 level is currently needed to invalidate the head and shoulders pattern.
EURGBP Medium-term Technical Analysis
The daily time frame shows that the EURGBP pair is still vulnerable to further decline as a massive head and shoulders pattern continues to point to a drop towards the 0.8200 mark.
Overall, a bearish bias is in place as the pair trades below its 200-day moving average, around the 0.8350 level. It is more likely than not that the EURGBP pair is going to slip towards the 0.8200 level.