EUR/GBP Price Forecast: Rallies to fresh highs and looks to the 0.8735 level

• The Euro hits fresh lows against a weaker Pound and aims at the 0.8735 YTD high.
• Lackluster UK consumption figures have increased bearish pressure on the Pound on Friday.
• EUR/GBP is on a bullish trend, with supports at 0670 and 0.8635.

The Euro extends its gains for the second consecutive day against the Pound Sterling, reaching fresh three-week highs above 0.8700, with bulls targeting the year-to-date high of 0.8740.

UK data released earlier on Friday revealed that Retail Sales increased by a softer-than-expected 0.9% rate in June, against expectations of a 1.2% growth and following a 2.7% decline in May. These figures come after rather downbeat business activity numbers released on Thursday and are pulling the GBP lower against its main peers.

Technical analysis: In a bullish trend with support at 0.8695  

From a technical perspective, the Euro might see some consolidation or a moderate correction, as the 4-Hour RSI has reached overbought levels. The broader bullish bias, however, remains in play, with previous resistance at 0.8695 likely to provide support now.

A further pullback might find buyers at the 0.8670 area, where the mid-term trendline support meets Thursday's low. Further down, the bullish trend will come into question, and bears will target the 0.8635-0.8645 area, where the lows of July 17, 18, 21, and 13 converge.

On the upside, the next key resistance lies at April's peak, at 0.8735 ahead of the 161.8% Fibonacci extension of the mid-June rally, at the 0.8750 area.