EURGBP recently broke above the top of its long-term range, indicating that a longer-term climb is in play.

Zooming in to the 1-hour time frame shows that price is moving inside an ascending channel and is currently testing support.

A bounce off this area, which is just above the short-term 100 SMA and .7500 major psychological level, could take EURGBP up to the top of the channel at the .7700 major psychological resistance. A larger pullback, on the other hand, could lead to a test of the broken long-term range resistance at .7450 near the 200 SMA.

The 100 SMA is above the 200 SMA, indicating that the path of least resistance is to the upside. In addition, stochastic is moving out of the oversold zone so sellers are taking control of price action. A break below the 200 SMA might be a sign that the pair is ready to get back inside its long-term range with support at .7000.

The BOE sounded less upbeat in their statement yesterday, reiterating that the downturn in oil is likely to weigh on their inflation outlook. Wage growth still remains weak, putting little upward pressure on inflation and consumer spending.

The ECB minutes did very little to dull the euro’s shine even though this meeting resulted to an expansion of the central bank’s stimulus program. Data from the euro zone has been mixed lately, although there have been signs of resilience. Also, the shared currency is gaining ground from China outflows.

Only medium-term reports are lined up from the euro zone and the UK today, which suggests that the current trend might carry on or that consolidation could be in order.

By Kate Curtis from Trader’s Way