EUR/GBP turned bearish in August this year, after rumours pointed towards a deal between the EU and the UK prime minister Boris Johnson. That improved the sentiment regarding the GBP and this pair has been bearish since then, losing more than 8 cents, despite BoJo’s deal being voted down in the British parliament.

The UK is headed towards general elections, which will be held on December 12. But, despite the uncertainties associated with elections, Conservatives are in a comfortable lead and they are expected to win a clear majority with the help of the Brexit Party.

So, the fundamental picture looks bullish for the GBP in the near term. As a result, EUR/GBP has been bearish since August, and moving averages are helping sellers keep the pressure to the downside. The 50 SMA (yellow) used to provide support on the way down, but it turned into resistance immediately after the bearish reversal.

This month, the 50 SMA has reversed the price down 2-3 times, so EUR/GBP will remain bearish as long as it stays below this moving average. But, now sellers face the major support area surrounding the big round number at 0.85. This will be a tough battle as the 50 SMA declines and forms a narrowing triangle with the support level at 0.85. Then, when the price heads towards the tip of the triangle, we will see an explosion on either side.