EUR/GBP rebounded strongly last week and the break of 0.8883 resistance argued that fall from 0.9083 has finished. But the lack of follow through momentum and subsequent deep retreat dampened this case. Near term outlook is mixed and we'll stay neutral first. On the upside, above 0.8886 will re-affirm the case that fall from 0.9083 has completed at 0.8642 and should bring stronger rise to retest 0.9083. On the downside, however, break of 0.8610/42 support zone will has 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 with daily MACD back above signal line. 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 0.8642 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.