Societe Generale’s Kenneth Broux highlights that EUR/GBP has extended its decline after breaking a Head and Shoulders neckline at 0.8610, with the move now seen as stretched. The cross has dropped to a 0.84 handle, its lowest since June last year, a 4.5% fall since November. Next technical projections are flagged near 0.8435, while 0.8545 is seen as interim resistance.

Cross slide seen as stretched

"In FX, the rush into sterling took many by surprise yesterday in G10 and technically both GBP/USD and EUR/GBP are making inroads that merit closer attention."

"For EUR/GBP, the return to an 0.84-handle, the lowest since June last year, marks a 4.5% drop since last November. The scale of the move is hard to justify relative to bond spreads and suggests flows tied to hedging or central bank reserve rebalancing or conversion flows are driving the price action in a thin market."

"Technically, next projections are located at 0.8435; the peak achieved earlier this week around 0.8545 may provide resistance should a brief rebound develop."

"EUR/GBP has extended its pullback after breaching the neckline of the Head and Shoulders pattern (0.8610). The decline appears somewhat stretched; however, clear signals of a meaningful rebound are not yet visible."

"Should a brief bounce materialize, the high achieved earlier this week at 0.8545 may serve as an interim hurdle. The next potential objectives could be located at projections of 0.8435 and the May 2025 trough near 0.8365/0.8350."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)