EURGBP has formed lower highs and found support at the .8700 major psychological mark, creating a descending triangle on its short-term time frames. Price is down to the support and might be due for another bounce to the top.

The moving averages are oscillating, barely offering strong directional clues at the moment. However, stochastic is indicating oversold conditions and is starting to pull higher, so a return in bullish pressure might be in order.

RSI appears to be on the move down to signal that there is some bearish momentum left. A break below support could set off a drop that’s the same height as the chart formation or around 150 pips.

Similarly a move above the triangle top could be followed by a rally that’s the same size as the pattern. However, EURGBP is already trading below both moving averages as an early indicator of bearish momentum.

Earlier this week, the UK printed another strong surge in CPI, signaling that the BOE might need to step up its tightening efforts. However, the latest jobs report points to more weaknesses in their already fragile economy.

Meanwhile, the euro could also be under downside pressure due to resurfacing geopolitical tensions between Ukraine and Russia. Neither country is taking responsibility for the blast in Poland, so the conflict might flare again and bring more risks to the euro region.

There are no other major reports due from both the UK and the eurozone for the rest of the week, leaving risk sentiment as the main driver of price action.

For now, risk-off flows appear to be in play thanks to renewed fears of a global recession on China’s reopening delays and JP Morgan’s forecasts of negative growth for the US next year.