EURGBP drew bulls‘ attention after setting a nice foothold around the 0.8700 key constraining zone, with the price accelerating to a new five-week high of 0.8790 early on Thursday.
Additional gains are likely as the momentum indicators keep strengthening within the bullish area. Yet, some caution is required as the RSI and the stochastics are close to overbought levels. Besides, with the price trading around the upper boundary of a descending channel at 0.8777 and not far below the key 0.8820 resistance area, the bears might be around the corner. Otherwise, should the bulls successfully claim the latter, October’s high of 0.8865 could be the next challenge ahead of the 0.8925 barricade. Even higher, the spotlight will fall on the 0.9000 psychological mark.
Alternatively, a bearish correction could retest the 0.8700 base before extending to the 0.8630 handle. A continuation lower could then meet the 200-day simple moving average (SMA) around the crucial 0.8570 floor, a break of which could press the price straight to the channel’s lower line seen around 0.8500.
In summary, although the technical signals in EURGBP are looking encouraging at the moment, traders may not engage in more buying unless the price pierces through the 0.8777-0.8820 region.
