EURGBP is trending lower in a shallow descending channel visible on its 4-hour chart. Price is approaching the channel resistance at the .8950 minor psychological level and might be due for a bounce.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the downtrend is more likely to resume than to reverse or that the top of the channel would probably keep gains in check. However, the gap between the moving averages is narrowing to suggest a potential upward crossover or pickup in bullish momentum.
Stochastic is pointing down from the overbought region, though, so sellers could still pick up their pace. In that case, EURGBP could slide back down to support at the .8700 handle.
Economic data from the UK turned out stronger than expected as the services PMI rose from 53.8 to 54.2, a notch higher than the 54.1 consensus. Euro zone medium-tier reports also printed a few higher than expected figures as well.
German retail sales, French preliminary CPI, and the region’s flash CPI readings are up for release today. Another round of upbeat results could continue to stoke expectations of ECB rate hikes later this year, following their taper plans this month.
There are no major reports due from the UK for the rest of the day, so pound price action could take its cue from other headlines, such as those related to Brexit.
By Kate Curtis from Trader’s Way