- EURGBP struggles to surpass 0.8600 and 200-day SMA
- Short-term bias is positive, but signs of oversold market exist
- Bank of England announces rate decision today at 11:00 GMT
EURGBP started May’s session on the right foot, swiftly reversing up after touching the support trendline taken from the March lows.
On Wednesday, the pair reached a high of 0.8616, but it quickly lost most of its gains and closed below the 200-day SMA around 0.8600. The RSI indicates more bullish potential as the price continues to rise, but the stochastic oscillator suggests limited room for improvement.
A step above the 200-day SMA could extend towards the 50% Fibonacci retracement of the November-February downtrend at 0.8630 and the descending trendline drawn from February. Further gains could potentially reach the 61.8% Fibonacci level of 0.8662 and the nearby resistance line. Yet, to access the 0.8700 territory, the bulls might need to secure a close above the 0.8685 constraining zone that eluded them in December.
If the pair remains trapped below 0.8600, it could pivot lower and seek shelter near 0.8559, which is the 23.6% Fibonacci level. If sellers pierce through the latter, the price might tumble towards the familiar 0.8527-0.8532 zone, a break of which might prompt a straight decline to the 0.8500 bottom.
Overall, the market structure of EURGBP appears to be forming a gentle upward pattern, despite ongoing choppiness. The recent crossing of the 20- and 50-day SMAs confirms a gradual bullish movement, although a temporary drop might happen soon, especially if the price holds below 0.8600.
