EURGBP has stabilized around 0.90 following a two-week sell-off that saw the pair declining by more than 3% over the period. The downside momentum gained strength after prices breached the bottom of the upward trending linear regression channel. The short-term bias remains bearish with the RSI still in negative territory, although there are signs that the current downtrend has bottomed out. The RSI appears to have halted its decline and the stochastics are in oversold territory, suggesting an upside reversal could be on its way. Should the pair attempt to resume its uptrend, the 50-day moving average (MA) will likely act as immediate resistance at around the 0.9040 level. A break above the 50-day MA should help bolster the upside momentum and push price action back inside the channel. However, prices will likely meet strong resistance at the lower channel line at 0.91. Further gains would see the pair targeting the 0.9140 and 0.9200 levels followed by 0.9260. A break above 0.9260 would clear the way towards August’s 8-year high of 0.9306. Failure to hold above this week’s one-month low of 0.8982 would deepen the bearish bias and bring into the view the previous congested area of 0.8940. The next major support would come from the 0.8850 area. A drop below this level would threaten the bullish medium-term outlook, which has already weakened from the latest downslide, as it would take prices closer to the 200-day MA.
