Mapping the Market: Euro may be poised for a rebound against sterling

The euro's decline against the British pound may be nearing its end, as technical analysis suggests a potential reversal following a sharp acceleration in July's price drop.

(Mapping the Market will not be published from August 3-17. It will resume on ​August 18.) By Peter Stoneham

July 31 - The euro has been ​sliding against the British pound for the past ‌nine ​months, but technical analysis indicates the trend could be nearing its end. Click here for a detailed technical analysis chart. The decline accelerated sharply in July, with the euro falling from 0.8617 ‌to 0.8455, according to data supplied by LSEG. Technical analysts often scrutinize a sudden acceleration in a trend closely because it can sometimes signal exhaustion of a move rather than strength — like a final push before a reversal.

That acceleration briefly pushed the euro below its 200-month moving ‌average. Moving averages smooth out price action over time, allowing analysts to better discern trends, and they often act as support, ‌where buyers come out in stronger numbers. In the case of the euro, the 200-month moving average had held firm since June 2025. Crucially, the break below it did not last. This "false break" of a key support level is considered a bullish signal. Now, as long as the euro holds above this average on ⁠a closing basis, ​the broader outlook favors the ⁠single currency.

The second development comes from candlestick charting — a method that tracks the open, high, low and close of a market to reveal shifts in sentiment. ⁠July's price action has formed a "hammer" pattern: a candle with a small body near the top and a long lower wick trailing beneath ​it. This shape suggests that although sellers drove prices sharply lower during the month, buyers stepped back in and pushed the ⁠price back up towards its opening level — a sign that selling pressure may be fading. Should this hammer candle hold through the end of July — when markets close ⁠on ​Friday — the euro could target gains to the 100-month moving average, currently positioned at 0.8658. However, a closing level near the lows of the month would hand the advantage back to sellers and deal the euro a significant blow.

What the chart shows: (Daily markets commentary from Reuters analysts on the signals financial charts are sending - and what they ‌might mean.) (Peter Stoneham is ‌a Reuters market analyst. The views expressed are his own. Editing ​by Burton Frierson and Nia Williams)