EUR/GBP Price Forecasts: Euro hesitates at 0.8770 amid bearish technical signs

The Euro extends losses below 0.8770 after rejection at 0.8785 earlier on Monday.

A stronger-than-expected UK manufacturing PMI release has provided some support to the GBP.

Technically, an evening star candlestick pattern warns about a trend shift.

The Euro has been capped at session highs in the area of 0.8785 against the British Pound on Monday, before giving again previous gains, and extending losses below 0.8770. A better-than-expected UK manufacturing PMI release has provided some support to the GBP, while the Euro remained sold across the board, despite some positive news on the Eurozone's manufacturing activity.

October's final UK S&P Global Manufacturing PMI has been upwardly revised to a 49.7 reading from the preliminary estimation of 49.6. The sector's activity remains within contraction levels, but it shows a significant improvement from September's 46.20 reading.

In the Eurozone, the HCOB final Manufacturing PMI confirmed the 50.0 preliminary reading, a moderate advance from September's 49.8 reading. Likewise, the German PMI manufacturing has confirmed a mild improvement, to 49.6 in October, from 49.5 in September,

Technical analysis: An evening star candle formation

A look at the daily chart shows that Friday's bearish candle completed an evening star formation, a candlestick pattern often seen at the end of bullish cycles, anticipating a trend shift. The Euro is holding above the mid-range of the 0.8700s at the moment, but the Relative Strength Index (RSI) in intraday charts is falling below the 50 level, reflecting a growing negative momentum.

To the downside, below session lows at 0.8765, the Euro might find support at a previous resistance near the 0.8725 area (October 28 low), ahead of the October 24 low, at 0.8700, and of the key support area between 0.8655 and 0.8665 (October 8, 13, and 16 lows)

Bulls remain capped below the October 30 low at 0.8785 so far, which is closing the path towards the October 29 and 31 highs, at 0.8815. Further up, the 261.8% Fibonacci extension of the mod-October high meets May 2023 highs, near 0.8770.