A few weeks ago, we discussed the potential bearish running triangle formation in the EUR/GBP pair characterized by an ABCDE pattern within contracting trend lines. Notably, as prices reached wave E, they approached the upper range limit, peaking around 0.8644, exactly at the upper side of a range.

Recent movements show the pound gaining against the euro, likely fueled by speculation that the ECB may cut rates before summer—there’s a 90% chance this might occur. Additionally, the release of UK inflation data today, which missed expectations slightly at 2.3% against a forecasted drop to 2.1%, still shows a cooling trend down from 3.2%, although not as sharply as anticipated. And markets tend to react to such discrepancies between expected and actual figures, that’s why GBP moved up a bit after the release.

Currently, the updated Elliott wave chart below shows that trendline support, extending from February’s lows, is breaking. This development could lead the pair towards the lower range boundary near 0.85, potentially setting the stage for a drop into a C-wave decline in the coming weeks.

Given these dynamics, the pound may remain robust against the euro in the foreseeable future, especially if it breaches the lower range limit. This scenario may also help us to pick the which currency to trade vs the us dollar, in case we want to avoid cross pairs.

(Click on image to enlarge)

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