EUR/GBP broke out to a new 11-month high on Friday, surpassing October’s peak of 0.7491, to hit an intraday high well above 0.7500. This breakout is the latest culmination of nearly two months of sharp advances from November’s lows around the 0.7000 psychological support level.
Earlier in the week, prior to Friday’s upside breakout, EUR/GBP had already broken above a major downtrend resistance line that extends back to the August 2013 high. That trend line breach occurred just a few days into the New Year as the pound continued to weaken against most other major currencies.
The current surge has prompted the pair’s 50-day moving average to rise once again towards a convergence with its key 200-day moving average, which could result in a bullish “golden cross” indication.
Although there may not be many fundamental reasons from a longer-term perspective for EUR/GBP to stage a full reversal of its longstanding downtrend, current bullish momentum could prompt a further upside correction in the short-term.
The next major upside target to continue the current short-term uptrend is at the 0.7600 resistance level, where EUR/GBP last traded around a year ago, in January of 2015. Further upside momentum above 0.7600 could reach up towards the 0.7750 resistance level. To the downside, any breakdown below 0.7300-area support should likely see a resumption of the entrenched bearish trend.