EUR/GBP Price Forecast: Testing the neckline of an inverse H&S, at 0.8460

• The Euro is pushing against the top of last month's trading range, at 0.8460.
• The Pound loses ground, weighed by weak UK employment data.
• Above 0.8460, the H&S's measured target is 0.8540.
  

The Euro is trading higher on Tuesday with the Pound hit by downbeat UK employment figures, and soft wage inflation, which have strengthened the case for further BoE easing in the coming months.

Claimants for unemployment benefits increased by 33.1K in May, more than three times the 9.5K increment foreseen by market analysts. The Unemployment Rate increased to 4.6%, its highest level in four years, and wage growth slowed to 5.2%, below the 5.3% expected.

Technical analysis: EUR/GBP might have reached a bottom at 0.8360

The technical picture suggests that the bearish cycle from mid-April highs might have been completed at 0.8360, and the pair is about to correct higher. A bullish divergence on the 4-Hour RSI, which is now popping up above the 50 level, and a potential inverse bullish Head & Shoulders pattern are endorsing that view.

UK data has boosted the Euro, which is treading the 0.8450-0.8460 area, a previous support, now turned resistance and the neckline of the mentioned Head and Shoulders pattern.

A confirmation above shifts the focus towards the measured target of the H&S formation at the April 25, 30 and May 2 highs, in the area of 0.8540 ahead of the April 21 high, at 0.8620.

On the downside, a bearish reaction below 0.8360 cancels this view and increases pressure towards 0.8325 (April 3 low) and the key 0.8245 year-to-date low.

EUR/GBP Daily Chart