EURGBP recently fell through support around .8565 and dipped to a low of .8510. Price has since pulled higher and might be in for a retest of the broken support.
This happens to line up with the 50% Fibonacci retracement tool and the 100 SMA dynamic inflection point, which could add to its strength as a ceiling. However, the 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside.
Stochastic is on the move up to reflect the presence of bullish pressure, so the correction could keep going until overbought conditions are met. RSI has more room to climb, so a break past the .8580 mark at the 61.8% level could signal that a reversal from the drop is due.
If any of the Fibs hold as resistance, EURGBP could resume the slide to the swing low or lower. The 100 SMA is above the 200 SMA, though, so the path of least resistance might be to the upside.
The UK has its CPI report up for release today, and a surge from 2.0% to 2.9% for the core figure is eyed. This might be enough to convince most BOE policymakers to go for a reduction in total asset purchases or an actual interest rate hike.
The core version of the report is slated to advance from 1.8% to 2.8%, which would be way past the central bank’s inflation target. Stronger than expected results could mean a strong rally for pound pairs while a weak read might still spur some gains if the figures stay above 2.5%.
There are no major reports due from the eurozone for today, but it’s worth recalling that the ECB refrained from giving a clear timeline on their taper plans. Although their PEPP is due to expire early next year, the central bank opted to defer any actual announcements until their next meetings.