EURGBP has been consolidating since September 2017 and has been stuck in a channel tilted slightly to the downside. The neutral to bearish picture in the medium term looks to last for a while longer after prices failed to break above the upper channel earlier this month.
Resistance was met at around the 0.8950 region after prices hit a 3-month high of 0.8967, forcing the pair to reverse lower. The negative bias in the near term is supported by the deterioration in the momentum indicators. The %K line of the stochastic oscillator has fallen sharply into oversold levels and is attempting a bullish crossover with the %D line. However, the RSI is flatlining at the 50-neutral level, suggesting any upside correction will be weak.
If prices continue to head lower, support should come from the 50-day moving average (MA) near the 0.8840 mark. A drop below the 50-day MA would reinforce the short-term bearish view and open the way towards the 0.88 level, which has been a major support area in the past.
However, should an upside reversal take form, immediate resistance will likely come from the 200-day MA around 0.8890. A break above the 0.8890 level could shift the bias back to a bullish one, with the next resistance coming from the 0.8920 level before re-challenging the March high of 0.8967.
