On Tuesday morning, the EUR/GBP broke through the low of the year, set last week around 0.8648.
Bearish sentiment in the market is influenced by:
→ discrepancy in bond yields. For example, the yield on 10-year bonds in Germany is 2.43% per annum. And in the UK, 4.37%;
→ worrisome market sentiment ahead of the German inflation news (during the day tomorrow), as well as ahead of ECB President Christine Lagarde’s speech (scheduled for Thursday at 12:30 GMT+3).
The technical analysis of the EUR/GBP chart shows evidence of supply dominating demand in May:
→ the uptrend line (shown in blue) is broken from top to bottom;
→ horizontal level 0.873, which served as support since the beginning of the year, was broken in May and also tested;
→ now the dynamics of the EUR/GBP rate is increasingly clearly forming a downward channel (shown in red).
In a bearish scenario, the rate may continue to decline within the descending channel, and even reach the area around 0.858, where the important support line (shown in green) and the lower line of the red descending channel intersect.