The euro may drop to the weakest against the pound in almost four years should the currency pair break below a key support level, Credit Suisse Group AG said, citing trading patterns.
“Prices remain in a tight range near term, but we remain bearish” for the euro, analysts led by David Sneddon, the head of technical analysis in London, wrote in an e-mailed note to clients.
The 17-nation common currency may fall toward 76.94 pence, the low from October 2008, if it breaches support at 77.55 pence, Sneddon said. That level represents the low from July 23, according to data compiled by Bloomberg.
The euro dropped 0.2 percent to 78.41 pence at 12:20 p.m. in London. It may encounter initial support at 78.12 pence, Sneddon wrote. The shared currency fell as low as 78.13 pence on Aug. 16, the least since July 31, Bloomberg data show.
Support refers to an area on a price graph where analysts anticipate orders to buy a currency may be clustered. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.