Societe Generale technical analysts report a bearish Head and Shoulders formation on EUR/GBP, signaling potential sterling strength against the euro. The currency pair has formed a lower peak near 0.8690, positioned below its 200-day moving average, and is now retreating toward the pattern’s neckline. This classic technical setup typically indicates a reversal in trend direction, suggesting the pound could gain ground against the single currency in the near term.
The pattern’s completion would confirm selling pressure on the euro-pound cross, creating trading opportunities for those positioned for sterling appreciation. Traders watching this pair should monitor the neckline level closely, as a decisive break below would activate the bearish pattern and potentially accelerate euro weakness. The positioning below the 200-day moving average adds credibility to the bearish technical outlook for EUR/GBP.
FXnCO Insight
Traders should prepare for potential sterling upside against the euro if EUR/GBP breaks decisively below the Head and Shoulders neckline, with stop-losses positioned above 0.8690 to manage risk.
Source: FXStreet