EUR/GBP Forecast: Bears Stay Intact Under 0.86 amid GBP Optimism

• As disputes between UK and EU over post-Brexit trading conditions persist, an agreement between the EU and Great Britain is unlikely by 2021.
• As the number of infections exceeds 50,000 every day, Britain hopes to contain the spread of Omicron.
• Technically, the EUR/GBP remains bearish below the 0.8600 level.

The EUR/GBP forecast remains broadly bearish as the Euro suffers amid poor risk sentiment and dovish ECB. As the European session approaches, the EUR/GBP price pulls back to an intraday low of around 0.8493 and then rises 0.03% to 0.8497.

In November, the unemployment rate in the euro area fell, and hawks at the European Central Bank (ECB) favored raising interest rates. Reuters reported, however, that the regional central bank’s momentum was less aggressive in December.

Furthermore, the European Union and the United States, who criticized China’s actions in the South China Strait and Taiwan in their talks in Washington on Thursday, are joining Beijing’s demands for lower tariffs on their goods to influence market sentiment.

Researchers from the UK have achieved a major breakthrough by obtaining approval from the UK Medicines and Health Products Regulatory Agency (MHRA) to use antibodies to treat a form of the Coronavirus called Omicron. The UK Medicines and Healthcare products Regulatory Agency (MHRA) approved Sotrovimab, a monoclonal antibody developed by GSK and Vir Biotechnology.

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On the other hand, Irish Foreign Minister Simon Coveney rejected a Brexit deal between the European Union (EU) and the United Kingdom under the Northern Ireland Protocol (NI) in 2021. Meanwhile, Northern Ireland Foreign Secretary Brandon Lewis said he was optimistic about reaching an agreement and pointed out the likelihood of Article 16 being invoked.

Despite pending Brexit talks between the EU and UK, post-Brexit trade negotiations between the US and UK have also been fragile. Washington has been unable to lift steel and aluminum tariffs on the UK.

Even though the final reading of the UK manufacturing PMI for November was weaker than original estimates, the Bank of England (BOE) is not expected to hike rates during its December meeting. However, the market continues to talk about the “old lady” replacing the Fed and rising interest rates.

EUR/GBP price technical forecast: Key levels to watch

Should EUR/GBP sellers break the 0.8470 support, buyers will focus on the seven-week-old horizontal area near 0.8420 ahead of the low of last month.

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The confluence of previous support and medium-term resistance around 0.8530, on the other hand, will be decisive for buyers looking to enter the market.

Add to Filters: 61.8% Fibonacci, 0.8552 level, 0.8595 November high, and the 0.8600 thresholds.

In summary, we can say that bears will remain in control until the EUR/GBP pair breaks below 0.8600.