EUR/GBP Price Forecast: Bears remain in control with 0.8550 support area on focus

The Euro (EUR) continues to decline as the British Pound (GBP) appears to be performing better amid rising tensions between the United States and Iran. On Monday, EUR/GBP fell for the third day straight, reaching 0.8555, which is approximately 0.3% lower than its peak from last week. Trading activity is minimal on Mondays, and data released on Friday indicated robust economic performance in both the UK and Eurozone; however, UK Retail Sales fell short in July.

ING analysts point out that, due to low volatility, sterling may still have some carry demand, positioning it among the most volatile-adjusted currencies in the G10. Consequently, they predict EUR/GBP will likely remain at around 0.8550 for now, with the cross anticipated to stay relatively stable as investors continue to prefer the Pound's carry profile.

EUR/GBP is currently trading at 0.8556, positioned halfway through the past four weeks' range, between 0.8530 and 0.8585. The immediate sentiment is bearish, with momentum indicators on the 4-hour chart showing mild weakness. The 14-period Relative Strength Index (RSI) is moving towards the mid-40s, and the Moving Average Convergence Divergence (MACD) has turned slightly negative, suggesting fading upside pressure while maintaining a range-bound condition.

Traders should keep an eye on the August 19 low at 0.8550 as a potential challenge for bears. A drop below the July 24 and August 12 lows, at 0.8530, would confirm a Double Top formation at 0.8585, with a potential target a few pips below the late July lows, around 0.8483. On the upside, the immediate resistance level is Friday's high of 0.8575, followed by the top of the July-August trading range, at 0.8585.