EUR/GBP Price Forecast: Trading Sideways Around 0.8500 as Bullish Momentum Fades

EUR/GBP traded sideways on Friday, with the spot price hovering near 0.8572, as price action remained confined within the previous day's range and market volatility stayed subdued. The rebound from below 0.8500 since mid-July has gradually lost momentum beneath a cluster of dense moving averages, leaving the short-term direction awaiting a clear catalyst.

**Rebound Momentum Fades, Moving Average Resistance Evident**

On the technical front, the 50-day simple moving average near 0.8584 poses immediate resistance, capping further upside. The Relative Strength Index sits at 54, reflecting a mildly bullish bias, but the shrinking MACD histogram suggests the recent rebound lacks sufficient momentum to decisively break above the moving average ceiling. A sustained break above the 50-day SMA could open the door toward the 100-day SMA near 0.8630; on the downside, 0.8550 offers immediate support, followed by the psychological level at 0.8500.

**Fundamentals Lack Directional Catalyst**

The latest eurozone Q2 GDP and employment data both came in line with expectations, offering no clear advantage to either the euro or the pound. Market participants are now awaiting remarks from the Federal Reserve Chair at the Jackson Hole symposium, while lingering concerns over Middle East tensions and their potential impact on energy prices and the European Central Bank's inflation outlook keep traders cautious, with little appetite for directional bets.

**Institutions Lean Toward Buying on Dips**

Strategists at Rabobank note that growing market expectations for the Bank of England to keep policy steady for the remainder of the year, coupled with pre-Budget jitters in October, suggest the pound still faces downside pressure. The bank favors buying EUR/GBP on dips toward the 0.8550 area, adding that a break above the recent high near 0.8588 could enhance upside potential.