Chart Art: EUR/GBP Long-Term Trend Correction Taking Place?

EUR/GBP has been on a steady downtrend throughout this year and looks ready for another major pullback.

Both the eurozone and the U.K. economy are scheduled to release their quarterly GDP figures this week, and these growth reports could determine whether the trend could resume or reverse.

Better keep tabs on these long-term inflection points!

EUR/GBP: Daily

Sterling has been outpacing the euro so far this year, as Bank of England (BOE) tightening hopes have run relatively higher compared to that of the European Central Bank (ECB).

The BOE’s latest policy decision even featured a “hawkish hike” that kept the door open for further tightening while one MPC member called for an even larger 0.50% increase, allowing EUR/GBP to extend its slide to the .8319 lows.

The pair appears to be easing off its slide while markets wait for Q3 GDP data to confirm these central banks’ policy outlook.

EUR/GBP appears to be setting its sights on the nearby resistance at the pivot point (.8410) and .8400 major psychological mark should the pullback pick up steam. Higher upside barriers include the 38.2% Fib at .8432 all the way up to the 61.8% Fib in line with R1 (.8490) and the trend line.

Keep an eye out for reversal candlesticks at any of these levels, as these could point to a continuation of the selloff back to the swing low or below the .8300 major psychological level.

On the other hand, a major miss in the U.K. GDP or a strong upside surprise in eurozone data could lead markets to reprice policy expectations enough to challenge the ongoing downtrend. In this case, upside targets include the swing high close to R2 (.8630) then R3 (.8720).

Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!

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