The EUR/GBP turned bearish in August, with the GBP/USD climbing more strongly than the EUR/USD. This forex pair lost nearly 300 pips, as the attention was turning towards the economic recovery from the coronavirus lockdowns, and the recovery in the Eurozone has slowed down considerably.
The 50 SMA (yellow), which was providing support during June, turned into resistance for most of August, when the price slipped below that level. The price continued to fall lower, reaching the 100 smooth moving average (gray) on the H4 chart, at 0.8860-70, which turned into support.
That moving average was pierced briefly on Thursday, but it reversed back up, and has bounced to around 130 pips now. The Brexit process has remained in the shadows since March, when the coronavirus broke out in Europe, but it has now resumed, and the situation right now doesn’t point to a trade deal, as Boris Johnson is trying to override parts of the deal, which means that the UK will leave the EU without a Brexit deal. That would be detrimental to the GBP, since the EU is the United Kingdom’s largest trading partner.