EURGBP recently broke past a resistance area at the .7650 minor psychological level then climbed to the .7850 area before showing signs of a pullback. Price is drawing support at the 38.2% Fib based on the latest swing low and high, although a larger pullback to the 61.8% Fib closer to the area of interest might be possible.
The 100 SMA is still above the longer-term 200 SMA, confirming that the path of least resistance is to the upside and that the uptrend could carry on. The 100 SMA appears to have held as a near-term dynamic support while the 200 SMA coincides with the 61.8% Fib.
Stochastic is heading up but is nearing the overbought area so a selloff could still take place. RSI is also heading higher and is currently on middle ground, indicating that buyers are gaining control.
Data from the euro zone has been coming in weaker than expected, as the latest industrial production figures from the top economies all indicated contraction. Preliminary GDP readings from Germany, Italy, and the region are up for release on Friday and another round of weak data could spur more losses for the shared currency.
Analysts are expecting to see a 0.3% growth figure from Germany and also a 0.3% GDP reading from Italy. Overall, the region is also expected to show a 0.3% expansion for the last quarter of 2015.
However, data from the UK has also been mostly weaker than expected, as the latest manufacturing production report also missed expectations. There are no major reports up for release from the UK for the rest of the week, but Brexit talks could also weigh on the pound.
By Kate Curtis from Trader’s Way