EURGBP has formed higher lows and higher highs connected by an ascending channel on its hourly time frame. Price is pulling back to nearby support levels marked by the Fibonacci retracement tool.

The 61.8% level lines up with the channel bottom around the .8550 minor psychological mark where more buyers might be waiting. If support holds, EURGBP could resume the climb to the swing high oat .8630 or the channel top closer to the .8650 minor psychological mark.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. However, the pair is edging below both moving averages as an early indicator of bearish pressure.

A break below the channel bottom could signal that a reversal from the uptrend is in order.

Still, stochastic is in the oversold region to indicate exhaustion among sellers, so turning higher would confirm that bullish momentum is picking up. RSI is also inching closer to the oversold region to indicate that sellers could use a break soon and let buyers take over.

Earlier this week, the ECB announced another 0.25% interest rate increase, but this turned out to be a “dovish hike” since policymakers mentioned that they might pause their tightening efforts from here.

With that, the euro sold off against most of its peers since the latest decision signaled a shift in their policy bias. Meanwhile, the BOE has its own policy decision coming up next week, and the UK central bank is widely expected to announce another hike.

A similarly “dovish hike” could mean downside for the pound, which could allow the uptrend on EURGBP to resume, but a hawkish announcement keeping the door open for more tightening could spur a channel breakdown.