As investors kick off the week, they are met with a cloud of uncertainty looming over Europe’s political landscape. The recent results of the four-day European Parliament elections have shown a significant rise in eurosceptic-nationalists, displacing liberals and greens. This shift in power has led to President Emmanuel Macron dissolving the French Parliament and calling for early legislative elections following a defeat to Marine Le Pen’s far-right party in the EU elections. The implications of these political changes are exerting pressure on the European Union’s structure, consequently weakening the euro’s value in the market.
Looking at the trading charts, we can see the EUR/GBP opening around the 0.8465 level on Monday, a price point not witnessed since August 2022. The technical analysis of the EUR/GBP pair reveals some key insights:→ The price has broken below the critical support level of 0.85, a level that has held since 2023;→ Since autumn 2022, the market has been on a downward trajectory, as indicated by the red channel. The bearish breakout of 0.85 further confirms this trend;→ The median line of the channel may act as a consolidation zone below 0.85, underscoring the significance of the channel;→ In the event of bulls trying to push back, the 0.85-0.853 zone could pose as a strong resistance point. However, in a downside scenario (e.g., a political crisis within Europe), the EUR/GBP price could potentially plummet towards the lower boundary of the mentioned channel.
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