EUR/GBP slips as bearish pressure mounts

• EUR/GBP stumbles near the 0.8540 level with no data to support the cross.
• US forces attack a Panama-flagged ship as it tries to cross the blockade.
• Next main data will be released on Wednesday for the Euro, with German HICP, and on Thursday for the GBP with the UK GDP.

EUR/GBP is trading on the lower end of its weekly range near the 0.8540 price zone on Tuesday. With no Eurozone or British data until early Wednesday, the cross is trading solely on sentiment, led by Iran's ongoing blockade of the Strait of Hormuz and the United States' (US) counterblockade of Iranian ports.

Adding to the negative sentiment, US forces attacked a Panama-flagged ship that was trying to cross through the Strait.

The Sterling is trading with a firmer tone, maintaining the cross in the red for a second consecutive day.

On Wednesday, the main catalyst for the EUR/GBP will be the German Harmonized Index of Consumer Prices (HICP). On Thursday, the preliminary United Kingdom (UK) Gross Domestic Product (GDP) will be released, giving another indication of the direction of the cross.

Short-term technical analysis:

On the 4-hour chart, EUR/GBP trades at 0.8545, holding a mildly bearish near-term bias as it remains capped beneath both the 100-period Simple Moving Average (SMA) at 0.8551 and the 20-period SMA at 0.8559. Short-term momentum is soft, with the Relative Strength Index (RSI) hovering near 37, hinting at lingering downside pressure even as the cross inches away from oversold territory.

On the topside, initial resistance aligns at 0.8547, followed by a tighter barrier at 0.8551 where a horizontal level coincides with the 100-period SMA, before the 20-period SMA at 0.8559 marks a stronger cap to any recovery attempts. On the downside, immediate support is seen at 0.8544, with a deeper floor at 0.8541. A clear break below this lower band would open the way for further weakness in the short term.

(The technical analysis of this story was written with the help of an AI tool. Know more.)