EURGBP has been moving steadily higher but is still inside a rising wedge consolidation pattern.

Price just tested the resistance and made a bounce, indicating that a test of support near the .7400 major psychological level might take place soon.

The 100 SMA is still above the longer-term 200 SMA, which suggests that another bounce is possible. Stochastic is moving up from the oversold zone while RSI is also indicating a possible pickup in buying pressure.

However, a break below the wedge support could set off a longer-term downtrend, possibly lasting by around 500 pips or the same size as the chart pattern. If an upside break takes place, price could rally by the same amount as well.

Headline jobs data from the UK was weaker than expected yesterday but components of the employment report showed green shoots. The average earnings index fell short of the expected 3.1% increase but came up close at 3.0%, reflecting a strong pace of growth in real wages accounting for inflation.

As for the euro, analysts are still waiting to see the final CPI readings later this week, as the initial estimates have indicated deflation. Downgrades could mean more euro weakness, as this would revive talks of further easing from the ECB.

The UK CPI also came in negative for September, although traders are more focused on the upward pressures from rising wages. There are no major reports due from both the UK and euro zone today.

By Kate Curtis from Trader’s Way