The Euro has surrendered earlier gains against the British Pound, slipping back below the 0.8700 mark. Since early October, EUR/GBP has been moving in a tight and choppy range of about 70 pips, fluctuating between roughly 0.8665 and 0.8730.
UK Inflation Disappoints, Pressuring the Pound
UK inflation data for September came in weaker than expected, showing a 3.8% year-on-year increase compared to the market forecast of 4.0%. This softer inflation reading has raised bets that the Bank of England may cut interest rates further before the end of the year, prompting the Pound to weaken against major currencies, including the Euro.
Technical Outlook: Symmetrical Wedge Formation Points to Possible Downside
Looking at the 4-hour chart, EUR/GBP is currently trapped within a symmetrical wedge pattern around the 0.8700 level. This pattern reflects a tightening price range, often a continuation signal, which in this case suggests a potential bearish breakout.
Immediate support lies between the wedge’s lower boundary near 0.8670 and the October 8 low at 0.8655. A decisive break below these levels could open the way toward the September lows around 0.8635, with a projected wedge target near 0.8620.
On the upside, resistance is clustered between the wedge’s upper boundary at 0.8715 and the 0.8730 level, which has capped the pair’s rallies since early October. A break above this zone could target the year-to-date high at 0.8750.
Euro Performance Snapshot
Today, the Euro has shown relative strength against the Japanese Yen while holding mixed performance versus other major currencies.