EUR/GBP edged lower to 0.8602 last week but was supported by above 0.8601 key support and turned sideway. The development is so far inline with our view. That is fall from 0.9137 is treated as the fifth leg of the triangle consolidation pattern that started at 0.9799 (0.8399, 0.9411, 0.8601, 0.9137, 0.8602?) and should be contained by 0.8601. Initial bias remains neutral this week. Break of 0.8732 resistance will affirm this case and turn bias to the upside for 0.8864 resistance first. Break there will confirm that decline from 0.9137 has completed and stronger rally should seen to this resistance next. On the downside, however, sustained break of 0.8601 support will invalidate this view and bring deeper decline towards 0.8399 support instead.
In the bigger picture, EUR/GBP is still bounded inside medium term converging range between 0.8399 and 0.9799. Current development suggests that fall from 0.9137 is the fifth leg in a triangle pattern. Hence, consolidation from 0.9799 should be near to completion, if not completed at 0.8602 already. Break of 0.9137 will argue that long term up trend is resuming and should target another high above 0.9799. Though, firm break of 0.8601 will indicate that price action from 0.9799 is developing into a deep correction with another low below 0.8399 before completion.
In the long term picture, current development suggests correction from 0.9799 is still in progress and the long term up trend from 2000 low of 0.5680 is not ready to resume yet. Nevertheless, correction from 0.9799 is expected to be contained by 0.7963/0.8186 support zone and bring up trend resumption. Rise from 0.5680 is still expected to continue to 261.8% projection of 0.5680 to 0.7258 from 0.6535 at 1.0666 eventually.