The channel breakdown could follow on the downside

• EUR/GBP broke out of a channel and closed below the lower channel line.
• It will likely continue to decline to bearish targets.

EUR/GBP has broken out of the bottom of a shallow rising channel. It closed below the channel line, suggesting that the breakout is likely to follow and decline, possibly to a target of 0.8406.

EUR/GBP daily chart

The bearish trend evident during August’s steep decline is likely to reassert itself. A break below 0.8419 would provide confirmation of a further decline towards a target at 0.8406, the 0.618 Fib extension of the lower rising channel height. Below that, prices are likely to decline to support at 0.8385.

Alternatively, it’s still possible—though unlikely—that the break turns out to be fake. If so, the price could move back inside the shallow uptrend channel and extend, with around 0.8460 as a possible upside target later.

(This story was corrected on September 17 at 11:15 GMT because the content referred to a different currency pair than the headline.)