• EUR/GBP consolidates losses between 0.8635 and 0.8650 on Wednesday.
• Renewed geopolitical concerns and higher Oil prices are acting as headwinds for Euro recovery.
• Technical indicators show a bullish divergence, which suggests that the bearish trend is losing steam.

The Euro (EUR) is trading flat against the British Pound (GBP) on Wednesday, with bears contained above 0.8535 yet failing to find acceptance above 0.8650 so far. Price action shows a clear bearish trend, although the bullish divergence evident in the four-hour Relative Strength Index (RSI) suggests that sellers might be exhausted.

In the fundamental domain, geopolitical tensions are back in the spotlight as US President Donald Trump called the US-Iran ceasefire to an end. Oil prices have bounced up from recent lows, and risk appetite has vanished, which is weighing on any significant Euro recovery.

European Central Bank (ECB) board member José Luis Escrivá affirmed on Wednesday that the bank should keep all options open but that monetary policy would normally “look through one-off energy price shocks.” The Euro barely moved following Escrivá’s comments.

Technical Analysis: Bullish divergence hints at a potential correction

EUR/GBP trades at 0.8548, with price action forming what looks like an ending wedge. Momentum indicators in the four-hour chart hint at a potential correction amid the bullish divergence in RSI (14) studies and the marginally positive reading at the Moving Average Convergence Divergence (MACD) indicator.

Upside attempts, however, remain shallow so far, with bulls holding below the descending trendline from mid-June highs, now around 0.8565, and the July 2 and 3 highs, in the 0.8275 area. On the downside, initial support emerges at the confluence of the one-year lows, at 0.8533, hit on Tuesday, and the wedge bottom, in the 0.8530 area. Further down, the target is the July 2025 lows around 0.8500.

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