EUR GBP continues head and shoulders slide towards downside target
EUR/GBP continued its sharp slide on Wednesday morning for the second consecutive day this week as the euro has generally remained in a prolonged slump and sterling has once again taken center stage as the star performer against other major currencies. In the process of this slide, the currency pair hit a new 16-week low under 0.7600 early on Wednesday.
Having dropped to this low, EUR/GBP has also hit key support at its 200-day moving average as well as the 50% retracement of the previous uptrend from the 0.7000-area lows of last November up to the multi-year high of 0.8115 that was reached early last month.
Since that high, the currency pair has been falling precipitously at times, finally breaking down below the 0.7750-area neckline of a clear head-and-shoulders pattern just a week ago. Although price subsequently rallied back up to retest the neckline, the past two days has seen a steep plunge as the pound has surged strongly. Head-and-shoulders patterns are typically considered major potential reversal patterns as they represent multiple failed attempts to continue the previous uptrend. The "neckline" of the head-and-shoulders formation connects the lows of the pattern, and a breakdown below the neckline is often taken as a bearish signal and potential reversal.
As with most technical chart patterns, the head-and-shoulders incorporates a price target. This target is derived by measuring the vertical distance from the top of the "head" to the neckline, and then projecting that distance down from the breakdown point of the neckline. In the case of the current pattern, this measured target falls just around the 0.7350 support level.
Having just reached down to touch the noted support at the 200-day moving average and 50% retracement, however, EUR/GBP has hit a critical technical juncture. Any strong breakdown below this support would confirm the pattern and could lead to a continued drop towards its 0.7350 target.
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2025