EUR/GBP rebounded strongly to as high as 0.8867 last week but after all it's still staying in range of 0.8642/8886. Thus, outlook remains neutral. As noted before, on the upside, break of 0.8886 will complete a head and shoulder bottom pattern (ls: 0.8704, h: 0.8642, rs: 0.8653). That will confirm completion of the decline from 0.9083 and should bring retest of this resistance. On the downside, though, break of 0.8610/42 support zone will have medium term bearish implication and should bring deeper fall to 0.8284/8355 support zone first.

In the bigger picture, price actions from 0.9799 (2008) should be unfolding as a consolidation pattern in the long term up trend. The first leg is completed with three waves down to 0.8067. At this point, EUR/GBP is still holding above 0.8610 support. Thus, there is no confirmation of completion of the second leg from 0.8067. Though, even in case of another rise, we'd expect strong resistance ahead of 0.9410 medium term resistance to bring reversal and starts the third leg. On the downside, break of 0.8610/42 support will now be an important bearish signal for 0.8067 and below.

In the long term picture, long term up trend from 2000 low of 0.5680 shouldn't be over yet and the choppy fall from 2008 high of 0.9799 should be a correction only. We'd expect such correction to be contained by 0.7963/0.8186 support zone and bring up trend resumption. Rise from 0.5680 is still expected to extend beyond 0.9799 high eventually.

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