EURGBP recently broke to the upside from an ascending triangle formation and zoomed up to a high of .8850. From there, price showed signs of a correction to the broken triangle resistance at the .8520 area.
Applying the Fib tool on the latest swing low and high shows that the 61.8% Fib is close to the broken resistance, which might now hold as support. If so, EURGBP could make its way back up to the highs and beyond.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 200 SMA lines up with the broken triangle resistance and might keep losses in check. Stochastic is indicating oversold conditions so buyers could take over soon.
Euro zone reports turned out mixed, as German flash manufacturing PMI and French flash services PMI came in better than expected but the German flash services PMI missed expectations. German Ifo business climate is due today and a rise from 111.0 to 111.3 is expected.
In the UK, the High Court ruling seems to have boosted the pound as requiring parliamentary approval before invoking Article 50 and starting the negotiation process sparked hopes that the actual Brexit could be postponed. UK public sector net borrowing fell from 10.8 billion GBP to 6.4 billion GBP, reflecting improving finances.
Moving forward, Brexit headlines could continue to push this pair around as these have been crucial in setting the outlook for the UK economy. Still, Prime Minister May has been reassuring in terms of making the best of Brexit and securing the best possible deal for the nation.
By Kate Curtis from Trader’s Way