- EUR/GBP remained under heavy selling pressure for the second straight session on Thursday.
- Weakness below the triangle support might have already set the stage for further downfall.
- Only a sustained strength beyond the 0.8610-15 region will negate the near-term bearish bias.
The EUR/GBP cross added the previous day's heavy losses and witnessed some follow-through selling for the second consecutive session on Thursday. The downward momentum dragged the cross to the lowest level since April 6, around the 0.8540 region during the first half of the European session.
From a technical perspective, this week's positive move faltered near a resistance marked by a downward sloping trend-line extending from April swing highs. A subsequent fall below the 0.8565-60 horizontal support has now confirmed a descending triangle breakdown and favours bearish traders.
With technical indicators on the daily chart drifting lower in the bearish territory and still far from being in the oversold zone, the stage seems set for a further near-term downfall. Hence, some follow-through weakness, towards the key 0.8500 psychological mark, looks a distinct possibility.
The downward momentum could further get extended and drag the EUR/GBP cross back towards 14-month lows, around the 0.8470 region touched on April 5.
On the flip side, any meaningful recovery attempted beyond the descending triangle support breakpoint might be seen as a selling opportunity around the 0.8580-85 region. This, in turn, should keep a lid on any further gains for the EUR/GBP cross near the 0.8600 mark, at least for the time being.
The latter is closely followed by the descending trendline hurdle, currently near the 0.8610-15 region. A convincing breakthrough will negate the bearish outlook and prompt some aggressive short-covering move. The EUR/GBP cross might then aim to surpass the 0.8635-40 supply zone.
EUR/GBP daily chart
Technical levels to watch
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