• EUR/GBP flatlines at five-month lows near 0.8625.
• Eurozone Services PMI and inflation data are unlikely to support the pair.
• The Euro has broken the neckline of a large bearish Head & Shoulders pattern.

The Euro remains practically flat, a few pips above a fresh five-month low, at 0.8620 against a stronger British Pound on Wednesday. The pair has been trending lower since peaking at 0.8865 in mid-November, and extended losses this week, breaking below a key support area at 0.8645, with no sign of a reaction in sight.

In the calendar on Wednesday, Eurozone inflation data is expected to confirm the deflationary pressure that prompted European Central Bank board Member Martin Kocher to raise the possibility of further rate cuts last week. Apart from that, the Services PMI is likely to confirm that the sector grew at its slowest pace of the last four months in January. Altogether, not the kind of data that would guarantee a steady Euro recovery.

The UK Global S&P Services PMI, by contrast, is expected to confirm that the sector’s activity accelerated to a 21-month high of 54.3 in January, from 51.4 in December.

Technical Analysis: EUR/GBP has broken the neckline of a large H&S pattern

EUR/GBP trades at 0.8627, after breaking the neckline of a large Head and Shoulders pattern, in the area of 0.8645, as can be best seen in the daily chart. This is a bearish sign that might confirm the end of the upward trend witnessed through most of 2025.

Technical indicators in the daily chart suggest a growing bearish momentum. The Moving Average Convergence Divergence (MACD) slips below its signal just under the zero line, with a mildly expanding negative histogram. The Relative Strength Index (RSI) sits below the midline without signaling oversold, indicating bearish pressure.

Next supports are at the intraday low of 0.8423, and the August 15 low in the area of 0.8600. The H&S pattern's measured target is near the June 10 low, at the 0.8420 area. To the upside, the mentioned H&S neckline, at 0.8645, is likely to act as resistance now. A clear move above here cancels the bearish view and brings the January 27 high, at 0.8716, into focus.

(The technical analysis of this story was written with the help of an AI tool.)