EURGBP has formed lower highs and lower lows connected by a descending channel that’s been holding since mid-June. Price looks ready to test the top of this channel again soon.

The Fibonacci retracement tool shows that the channel resistance lines up with the 61.8% Fibonacci retracement level near the .8500 major psychological mark. This also coincides with the 200 SMA dynamic inflection point.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that resistance is more likely to hold than to break. In that case, EURGBP could soon make its way back down to the swing low at .8340 or the channel bottom closer to .8300.

Stochastic is moving up to show that there is some bullish pressure left, but the oscillator is also nearing the overbought area to reflect exhaustion among buyers. RSI is already turning lower to suggest a pickup in selling pressure, without even reaching the overbought zone.

A break above the channel top and 200 SMA, on the other hand, might mark the start of a reversal for EURGBP.

The UK printed mostly better than expected data, reporting a smaller contraction in its quarterly GDP and slight dips in manufacturing and industrial production. The economy shrank only 0.6% in Q2 versus the estimated 1.2% contraction while quarterly business investment jumped 3.8%.

This might leave some room for the BOE to hike interest rates again in their next policy meeting, enabling them to combat inflation without worrying about derailing growth.

There are no major reports due from the eurozone for the rest of the week, so the euro might simply function as a counter currency. It’s also worth noting that risk appetite has picked up somewhat, following weaker than expected inflation data from the US.