EUR/GBP Breaks Below 0.8610 as Yield Convergence Trade Reverses

On July 2, EUR/GBP broke decisively below the key multi-month support at 0.8610, accelerating lower after softer Eurozone inflation data and a cautious ECB tone prompted unwinding of the ECB/BoE yield convergence trade. The pair had first hit its lowest level since August 2025 on June 24 with an 0.8% drop but held the 0.8600 zone, then formed a reverse head-and-shoulders pattern and rebounded toward 0.8635 by June 26. After selling off from the projected reversal zone on June 29 and consolidating above support on July 1 amid fading bearish momentum, the breakdown on July 2 has shifted the near-term bias firmly bearish, targeting 0.8550 and potentially 0.8466.