EUR/GBP formed a short term bottom at 0.8221 last week and rebounded strongly to as high as 0.8376 before paring much of the gains. More consolidations could be seen above 0.8221 in near term and another recovery cannot be ruled out. But strong resistance should be seen from 38.2% retracement of 0.8830 to 0.8221 at 0.8454 to limit upside and bring fall resumption eventually. Below 0.8221 will extend the whole decline from 0.9083 towards 0.8067 key support next.

In the bigger picture, price actions from 0.9799 are treated as a consolidation pattern in the long term up trend. Fall from 0.9083 is viewed as the third leg and is now heading to 61.8% projection of 0.9799 to 0.8067 from 0.9083 at 0.8013 (which is close to 0.8 psychological level). We'd still expect strong support inside 0.7693/8186 support zone, possibly near to 61.8% retracement of 0.6535 to 0.9799 at 0.7782) to contain downside to finish off the consolidation. On the upside, though, break of 0.9083 resistance is needed to indicate completion of the whole pattern from 0.9799. Otherwise, there will also be risk of another fall even in case of rebound.

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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