The EUR/GBP cross is trading above 0.8650, consolidating after recouping some earlier losses. At the time of writing, the pair is near 0.8653, showing resilience despite a 0.3% contraction in Germany’s Q2 GDP, worse than the -0.1% initial estimate.
The Euro also faced pressure from Eurozone consumer confidence, which fell to -15.5 in August from -14.9 in July, below forecasts of -14.7, highlighting persistent household caution.
In contrast, the UK saw an improvement in sentiment, with the GfK Consumer Confidence survey rising to -17 in August from -20, surpassing expectations of -19. The rebound likely reflects easing financial pressures following recent Bank of England policy moves, although inflation and job concerns remain.
Technical outlook
EUR/GBP is forming a bullish flag-and-pole pattern on the 4-hour chart, with the rebound from 0.8600 forming the pole and the current consolidation shaping the flag.
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Support levels: 20-period SMA near 0.8650, 50-SMA at 0.8636, 100-SMA at 0.8660 acting as a near-term pivot.
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Resistance levels: Flag resistance at 0.8670-0.8675, with targets at 0.8700, 0.8720, and 0.8750 on a clean breakout.
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Downside risk: Falling below 20-SMA could expose 50-SMA and a deeper pullback toward 0.8600.
Momentum indicators remain constructive: RSI around 56 supports bullish bias without overbought pressure, and MACD near zero with a slight positive tilt confirms consolidation within an uptrend.
Conclusion: As long as EUR/GBP holds the 0.8650-0.8635 support zone, the short-term technical outlook favors a potential bullish breakout.
