EURGBP has been trending lower on its 1-hour time frame, trading inside a new descending channel pattern. Price is currently testing the resistance and could be due for a drop to support.
The resistance lines up with the 50% Fibonacci retracement level on the latest swing high and low, as well as an area of interest or previous support and resistance. This is also in line with the moving averages.
Speaking of moving averages, the 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This suggests that the selloff is more likely to resume than to reverse. Stochastic hasn’t quite reached overbought conditions yet but is already turning lower to indicate a pickup in selling pressure.
The euro was in a weak spot last week after the ECB refrained from dropping more hawkish hints, despite upgrading their growth forecasts. Prior to this, a few medium-tier reports from its top economies printed weaker than expected results, so bulls might be worrying about a slowdown as well.
Meanwhile, the BOE wasn’t as hawkish either, even though top-tier UK data from earlier in the week turned out mostly stronger than expected. The MPC voted unanimously to keep rates and asset purchases on hold for the time being.
Up ahead, final CPI readings from the euro zone are due today, ahead of the German Ifo business climate index tomorrow. UK current account balance is due on Thursday and there are no other major reports so traders could pay closer attention to Brexit updates.