EURGBP is currently testing a former resistance level around the .8800 major psychological mark, which appears to be holding as support. This lines up with the 50% Fibonacci retracement level on the swing high and low on the daily time frame. Stochastic is also pointing up to reflect the presence of buying pressure.
The 100 SMA is above the longer-term 200 SMA on this chart so the path of least resistance is to the upside, which suggests that the uptrend is more likely to resume than to reverse. The gap between the moving averages is also widening to reflect strengthening bullish momentum that might take price up to the swing high around .9300.
Economic data from the UK didn’t turn out so bad yesterday as the services PMI ticked up from 53.2 to 53.6, reflecting a stronger pace of industry expansion versus the consensus of no change. This is also in contrary with the results of other industry PMIs in the manufacturing and construction sectors. There are no major reports due from the UK economy today, so Brexit-related updates might push the pound around.
Meanwhile, data from the euro zone was mixed as final services PMI readings mostly came in line with expectations while Italy’s reading surprised to the downside and Spain’s figure was better than expected.
The ECB minutes are due next and traders are hopeful to get more clues on tapering plans. Draghi said that they have already started initial discussions and could reach a decision this month, probably agreeing to start tapering by December. However, any signs of strong dissent within the committee could douse expectations for the year.
By Kate Curtis from Trader’s Way