GBP/USD and EUR/GBP: Can British Pound Bounce Back?

Aayush Jindal -

GBP/USD declined heavily and broke the 1.3050 support area. EUR/GBP is currently correcting lower, but it is still trading above a crucial support at 0.8640.

Important Takeaways for GBP/USD and EUR/GBP

  • The British Pound remained in a bearish zone and declined below 1.3050 and 1.3020.
  • There are two bearish trend lines in place with resistance at 1.3005 and 1.3035 on the hourly chart of GBP/USD.
  • EUR/GBP traded towards the 0.8680 level before starting a downside correction.
  • There is a key bullish trend line formed with support at 0.8640 on the hourly chart.

GBP/USD Technical Analysis

The British Pound struggled to stay above the 1.3120 and 1.3100 levels against the US Dollar. The GBP/USD pair started a downward move and broke the 1.3050 and 1.3020 support levels.

The pair even broke the 1.3000 support and settled below the 50 hourly simple moving average. It traded as low as 1.2978 on FXOpen, and recently started consolidating losses. It moved above the 1.2990 level and the 23.6% fib retracement level of the recent decline from the 1.3052 high to 1.2978 low.

However, the pair seems to be struggling near the 1.3000-1.3010 area. It failed to break the 38.2% fib retracement level of the recent decline from the 1.3052 high to 1.2978 low.

There are also two bearish trend lines in place with resistance at 1.3005 and 1.3035 on the hourly chart of GBP/USD. The first trend line holds the key near 1.3005 since it coincides with the 50 hourly SMA.

If there is a successful break above 1.3005, the pair could recover towards the 1.3030 and 1.3040 levels. On the other hand, if the pair fails to climb above 1.3005, there could be more losses in the near term.

An initial support is at 1.2980, below which the pair may perhaps extend losses towards the 1.2965 or 1.2950 level.

EUR/GBP Technical Analysis

The Euro gained advantage of the British Pound weakness and climbed above the 0.8600 level. The EUR/GBP pair climbed above the 0.8640 and 0.8650 levels to move into a positive zone.

The pair tested the 0.8680 level and recently started a downside correction. It broke the 0.8660 and 0.8650 levels. A swing low was formed at 0.8635 and the pair recently recovered above the 0.8640 and 0.8645 levels.

It even broke a connecting bearish trend line at 0.8645 on the hourly chart, plus the 23.6% fib retracement level of the last drop from the 0.8680 high to 0.8635 low.

However, the pair struggled near 0.8655 and remained below the 50% fib retracement level of the last drop from the 0.8680 high to 0.8635 low. On the downside, there is a strong support in place near the 0.8640 level.

There is also a key bullish trend line formed with support at 0.8640 on the hourly chart. If there is a close below the trend line and 0.8635 swing low, there could be a downside extension below the 0.8620 level.

The next key support is at 0.8600, where buyers are likely to appear. Conversely, if EUR/GBP stays above the trend line support, there are chances of a fresh increase above the 0.8655 and 0.8660 levels in the near term. The next main resistances are 0.8680 and 0.8700.