EUR/GBP Continues Downward Trend, Trading Near 2-Year Low
The EUR/GBP pair has been on a downward trajectory since the beginning of the year, reaching close to a 2-year low at 0.8320. This trend is attributed to the unfavourable political environment in France compared to the newly formed Labour-led UK government, which supports pro-growth policies. As a result, the Euro may continue to underperform against the Pound.
The pair is currently oscillating within a short-term downtrend phase, with key resistance at 0.8500. This analysis serves as a follow-up to a previous report published on 6 June 2024, titled “EUR/GBP Technical: Hovering at a 14-month low ahead of ECB.”
Recent price actions have seen the EUR/GBP break below the 0.8540 pivotal resistance and hit a short-term support level at 0.8440. The pair reached an intraday low of 0.8397 on 14 June before stabilizing post-UK general election and the second round of the French legislative election.
The Euro has started to lose its shine against the Pound, with the pair trading below its 200-day moving average and hovering near the 2-year low. The Brexit referendum in 2016 triggered a 25% gain in the EUR/GBP pair over the next four years, reaching a high of 0.9500 in March 2020.
The political climate in the UK and EU is driving this shift, with the UK government advocating growth policies while France faces uncertainty with a hung parliament. The lack of pro-growth initiatives in France may lead investors to favor UK financial assets over Eurozone assets.
From a technical analysis perspective, the EUR/GBP continues to trade within a short-term downtrend phase, with the potential for a further bearish move if the 0.8500 resistance is not surpassed. A break below the recent low of 0.8400 could expose the next support level at 0.8345.
Overall, the EUR/GBP pair remains in a downward trend, with key resistance at 0.8500. The political environment in France and the UK will play a significant role in determining the future performance of the Euro against the Pound. The Importance of Regular Exercise
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