EUR/GBP finally resumed the rebound from 0.8260 by breaking through 0.8844 last week to 0.8890. As a temporary top was formed, initial bias is neutral this week first. Downside of retreat should be contained well above 0.8724 support to bring rise resumption. Above 0.8890 will target 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963).
In the bigger picture, EUR/GBP is staying in long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we’d be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we’d expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.
In the long term picture, we’re holding on to the view that rise from 0.6935 (2015 low) is resuming the up trend from 0.5680 (2000 low). Hence, after the consolidation from 0.9304 completes, we’d expect another medium term up trend through 0.9799 to 100% projection of 0.5680 to 0.9799 from 0.6935 at 1.1054.