EURGBP has been trending lower, with a downtrend line or channel visible on the 1-hour time frame. Price appears to be pulling up from its latest drop and might find resistance around the 100 SMA, which has acted as a dynamic area of interest in the past.
The short-term SMA is below the long-term 200 SMA, confirming that the downtrend is set to carry on. Another selloff could lead to a test of the recent lows around .7100, which is the bottom of the range visible on longer-term charts.
RSI is moving up, suggesting that there could be some buying pressure left for a larger pullback while stochastic has already reached the overbought zone and suggesting that sellers could take control of price action really soon.
EURGBP Fundamental Factors
The UK retail sales release could provide additional volatility in the London trading session, although the report might show a flat reading and force the pound to retreat. Nonetheless, wage growth has been strong in May and inflation was subdued, suggesting that consumers might’ve taken advantage of bargain prices and higher disposable income.
Apart from that, the Greek debt talks in the Eurogroup meetings could also determine how the euro would trade. Their recent negotiations have ended in a standstill, as neither side is willing to compromise. Another impasse in today’s discussions could lead to euro weakness, as this would increase the odds of a Greek debt default and potential euro zone exit.
Markets are waiting to hear if the debt-ridden nation will be able to meet its loan obligations for the month and lower odds of that happening could lead to the long-overdue euro selloff, particularly against the pound which is enjoying strong economic data. Recall that average earnings showed a higher than expected 2.9% gain while the BOE confirmed that the pickup in wages would keep growth and inflation supported.
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