FX.co ★ EUR/GBP dynamics scenarios on August 23, 2023

The pound fell sharply after today's release of the PMI indices, including in the major cross-pairs. For instance, the EUR/GBP pair surged following this release, jumping to a mark of 0.8558, through which a critical short-term resistance level (200 EMA on the 1-hour chart) runs.

Considering the overall downward trend of the EUR/GBP pair, which has been declining within the downward channels on daily and weekly charts, and also the sharp intraday rise with the pair's average intraday volatility of 80–100 points, it's logical to expect a rebound from this resistance level and a return to the downward trend.

The lower line of the downward channel on the weekly chart runs through the 0.8340 mark, corresponding to the lows of July 2022. In the event of breaking the local support level of 0.8492 (this month's low), levels 0.8340 and 0.8415 (144 EMA on the monthly chart) could become the downward targets for EUR/GBP. However, a break below the key support level of 0.8235 (200 EMA on the monthly chart) will lead EUR/GBP into the territory of the global bear market.

In an alternative scenario, should EUR/GBP break the resistance level of 0.8558, it might continue its corrective growth towards resistance levels 0.8586 (200 EMA on the 4-hour chart), 0.8595 (50 EMA on the daily chart), and 0.8600.

Breaking above the key resistance level of 0.8660 (200 EMA on both daily and weekly charts) would return EUR/GBP to the bull market territory.

For now, short positions remain preferable.

Support levels: 0.8500, 0.8492, 0.8415, 0.8400, 0.8340, 0.8300, 0.8235

Resistance levels: 0.8558, 0.8586, 0.8595, 0.8600, 0.8653, 0.8660, 0.8700, 0.8800, 0.8825, 0.8870.