Daily chart points to further falls for EUR/GBP

The euro has been in retreat against the pound and technical analysis using the daily charts suggest this trend is set to continue.

GBP/EUR forex pair
Source: Bloomberg

Since hitting a high in April this year, the euro has been in retreat against sterling. A key driver of future direction is going to be the UK’s referendum on continued membership of the European Union on 23 June. The technical charts suggest the euro could fall further.

EUR/GBP has formed a head and shoulders pattern on the daily chart. This reversal pattern has recently been completed with the breach of the neckline. From the height of the formation, a target price of £0.7357 can be calculated. A breach of this level would take it down towards previous horizontal support at £0.7484.

The pair has more immediate support at the rising weighted 200-day average line at £0.7722, and is currently testing this level. In the short-term it could go in the direction of the neckline, currently at £0.7768. A closing price below this could lead to further declines as described above.

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