• EUR/GBP retreats from the highest levels since early July, snaps a three-day uptrend.
• Overbought RSI conditions signal further consolidation of gains.
• Previous resistance line, 50% Fibonacci retracement level challenge further downside.

EUR/GBP pares recent gains around a two-month high, keeps pullback from the multi-day top near 0.8590 ahead of Wednesday’s London open. In doing so, the cross-currency pair prints the first daily loss in four.

It’s worth noting that the overbought RSI conditions appear to have probed the EUR/GBP bulls at the eight-week high.

However, a convergence of the resistance-turned-support line from mid-June and the 50% Fibonacci retracement level of June-August downside, around 0.8530, appears the key support to watch during the pair’s further weakness.

Should the EUR/GBP prices drop below 0.8530, the odds of witnessing the pair’s south-run towards 0.8500 can’t be ruled out.

That said, the 61.8% Fibonacci retracement level near 0.8575 could restrict the quote’s immediate declines.

Meanwhile, recovery moves need to cross the latest peak of 0.8603 to convince buyers.

Even so, the 78.6% Fibonacci retracement level and July’s peak, respectively near 0.8630 and 0.8680, could test the EUR/GBP bulls before directing them to the yearly top marked in June around 0.8720.

EUR/GBP: Four-hour chart

Trend: Limited downside expected