EUR/GBP Price Forecast: Hesitates near 0.8550 with the risk-off mood capping rallies

The Euro (EUR) against the British Pound (GBP) remains uncertain on Monday, as the pair hesitates near 0.8550 amid risk-averse market sentiment. This cautious mood is fueled by heightened tensions in Iran and escalating Crude prices. Although negative pressure has slightly subsided, EUR rallies are currently being held back. On Friday, the pair experienced a sharp decline after Federal Reserve (Fed) Chairman Kevin Warsh boosted expectations of future interest rate hikes, signaling that policymakers "have work to do" on inflation.

The EUR/GBP rate stands at 0.8556, precisely halfway through the significant trading range observed over the past few weeks. However, bullish signals from levels near the 0.8580 resistance and the lower high printed on Friday have reignited bearish hopes. Momentum indicators in 4-hour charts have turned negative, with the Relative Strength Index (14) around 40 suggesting slight bearish momentum, while the Moving Average Convergence Divergence (MACD) has dipped below zero, indicating waning upside pressure.

Bears are expected to face resistance at the August 25 low near 0.8545, while the crucial support level remains the August 12 low at 0.8531. If this level is breached, it would confirm a multiple top between 0.8575 and 0.8585, shifting focus towards the July 20 and 21 lows at 0.8485 and 0.8490, respectively. Bulls face significant resistance at Friday's top of 0.8576 and the July and August peaks near 0.8585.

Above this level, the next target is a previous support area just above 0.8600 (June 24 and 30 lows).