EURGBP has gradually been trending higher, moving above a rising trend line visible on its 1-hour time frame. Price might be ready for a pullback towards the support around the .8500 major psychological mark as stochastic is heading south and showing that sellers are in control for now.
The 100 SMA is above the 200 SMA so the path of least resistance is still to the upside. A larger pullback could last until the short-term moving average, which could hold as a dynamic inflection point.
However, a break below the trend line could also be an early signal of a reversal. This could then take price down to the next area of interest around .8400, which is close to the 200 SMA. Still, a bounce could ensue once the oscillator turns from the oversold region.
ECB head Mario Draghi refrained from disclosing more details on the central bank’s monetary policy plans in his testimony yesterday, which was probably why the shared currency advanced. Meanwhile, more restrictions from UK property funds fueled speculations of additional financial market stress in the economy.
For today, German industrial production and French trade balance numbers are up for release. Yesterday’s German factory orders report was weaker than expected since it showed a flat reading instead of rising 1.0%.
UK manufacturing production data is due today and a 1.2% decline is eyed, erasing part of the 2.3% gain in the previous month. The ECB meeting minutes are also up for release later today and any clues on what the central bank might do in the event of a Brexit could spur volatility for this pair.
By Kate Curtis from Trader’s Way