Bearish Trend Remains Intact as Dynamic Resistance Caps Gains

Central Bank

Economic

Summary:

Adding further significance to this area, it also coincides with the 0.618 Fibonacci retracement level, a zone that corrective moves frequently target before the prevailing trend resumes.

SELL EURGBP

EXP

PENDING

0.86000

Entry Price

0.85200

0.86400

0.85948 +0.00044 +0.05%

Pips

PENDING

0.85200

Exit Price

0.86000

Entry Price

0.86400

The UK Chancellor announced on Monday plans to grant greater powers to metropolitan regions in an effort to attract private investment, supporting Prime Minister Andy Burnham’s broader agenda of transferring responsibilities away from central government. Healey also reaffirmed the government's commitment to fiscal discipline and limiting cost increases for both businesses and households. Among the measures outlined was a pledge to reduce regulatory costs by 25% before the next general election, which is currently scheduled for 2029.

Meanwhile, the Bank of England (BoE) is expected to keep interest rates unchanged at 3.75% for the remainder of this year and at least until mid-2027, according to a Reuters survey. BoE Governor Andrew Bailey stated on Tuesday that he wanted to challenge the perception that further rate increases are simply a matter of time. Instead, he emphasized that any future policy decisions will remain dependent on economic conditions and geopolitical developments.

Speaking before the UK Treasury Select Committee during the Monetary Policy Report hearing, Bailey reiterated that inflation risks remain tilted to the upside while also stressing that he does not believe the economy is close to entering a recession. He noted that the BoE yield curve, which reflects market expectations, highlights investor concerns about additional increases in energy prices. Bailey further clarified that policymakers do not have a predetermined plan to raise rates and that any future adjustments would be driven by incoming data and evolving economic conditions.

The European Central Bank (ECB) also continued its tightening cycle by raising its three key interest rates by 25 basis points, marking its second increase of the year and bringing the deposit facility rate to 2.50%. Policymakers justified the decision by pointing to the ongoing conflict in the Middle East, which continues to generate inflationary pressures and increases the likelihood that inflation could remain above the ECB’s 2% target for a longer period.

The ECB’s latest economic projections reflect these concerns. The central bank expects headline inflation to average 3.0% in 2026, moderate to 2.5% in 2027, and gradually move closer to 2.1% in 2028. While inflation is still expected to trend lower over time, policymakers acknowledged that the disinflation process is progressing at a slower pace than previously anticipated.

During the post-meeting press conference, ECB President Christine Lagarde stated that the Eurozone economy continues to demonstrate resilience, while most underlying inflation measures remain relatively stable. However, she cautioned that short-term inflation expectations remain elevated and that higher energy prices are likely to continue filtering through to food and goods prices over the coming months.

Lagarde also reiterated that the ECB expects inflation to return to target toward the end of 2027, emphasizing that longer-term inflation expectations remain anchored around 2%. Regarding future monetary policy decisions, she avoided providing explicit forward guidance, noting that the Governing Council did not discuss a predefined rate path and that future policy actions will continue to depend on incoming economic data. Bearish Trend Remains Intact as Dynamic Resistance Caps Gains_1

Bearish Trend Remains Intact as Dynamic Resistance Caps Gains_1

Technical Analysis

EURGBP remains in a corrective bullish phase within a broader bearish trend that continues to be defined by a well-established descending trendline. This structure has recently been reinforced by the 200-period moving average, which has acted as dynamic resistance and is now being tested once again. The 200-period moving average is currently located at 0.8598, while the 100-period moving average stands at 0.8552. Adding further significance to this area, it also coincides with the 0.618 Fibonacci retracement level, a zone that corrective moves frequently target before the prevailing trend resumes.

As a result, if buyers fail to secure a decisive breakout above this resistance cluster, the broader bearish trend could regain momentum. Under that scenario, the pair may resume its downward movement with an initial objective at the local support level located at 0.8521.

Looking at momentum indicators, the Relative Strength Index (RSI) is currently positioned at 58, slightly above the neutral threshold but already showing signs of rejection. A move back below the 50 level could indicate strengthening bearish momentum and potentially accelerate the downside move. At the same time, the MACD remains near neutral territory, with the histogram currently performing a bearish crossover. Should the histogram begin to gain further depth below the zero line, it would provide additional confirmation that downside momentum is building. Meanwhile, the signal lines remain slightly above neutral territory, but unless they strengthen further and move higher, a bearish crossover would continue to support the view that the path of least resistance remains to the downside.

Trading Recommendations

Trading direction: Sell

Entry price: 0.8600

Target price: 0.8520

Stop loss: 0.8640

Validity: Sep 23, 2026 15:00:00

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Bearish Trend Remains Intact as Dynamic Resistance Caps Gains

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