EUR/GBP – A strong end to the year?

A bullish breakout potentially coming

The euro has been trending lower against the pound all year but could that be about to change as it draws to a close?

The pair has recovered well over the last few weeks and while the top of the descending channel is arguably the level it needs to overcome to break that trend, a strong signal could come sooner.

The 200/233-day SMA band has been capping rallies in recent months and a move above here would technically put the pair back into bullish territory before the channel breakout has occurred.

It would also represent a break of the 61.8 fib level – September highs to November lows – which would suggest the recent rally is more than just a corrective move.

If the pair does manage to break above here, it could be an interesting support level should the pair initially pull back off the top of the channel as some profit-taking kicks in.

Of course, this is easier said than done but we could soon see whether the euro is ready to put an end to a miserable 2021 against the pound.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.