EURGBP has been trending lower on the daily time frame and is currently testing the resistance of its descending channel.

If this keeps gains in check, price could head back down to support at the .8300 major psychological level.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, the gap between the moving averages is pretty narrow so a crossover could happen anytime. 

Stochastic is already indicating overbought conditions and appears ready to turn lower, possibly drawing sellers back to the game. On the other hand, sustained buying pressure could lead to a break past the channel resistance at .8700 and a reversal from the selloff.

In his latest testimony, ECB head Draghi acknowledged that economic risks have subsided but warned that headline inflation could remain subdued. He also mentioned that an extraordinary amount of monetary policy support is needed, leading to some euro weakness.

Meanwhile, the latest poll from ComRes indicated a 12-point lead for Theresa May’s Conservative party at 46% versus the 34% of Labour. This is a wider gap compared to the YouGov results at a 5-point lead, assuring market watchers that the UK can avoid additional political uncertainty ahead of Brexit negotiations.

By Kate Curtis from Trader’s Way