EURGBP has formed lower highs and lower lows connected by a falling channel that’s been holding since early this month. Price is testing support and could be due for a quick bounce to resistance from here.

The Fibonacci retracement tool shows additional levels where sellers might be waiting. The 38.2% Fib is at .8541, then the 50% level is close to the 100 SMA at the .8550 minor psychological mark. A larger correction could reach the 61.8% Fib at the channel top and 200 SMA.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. If any of the Fibs are able to keep gains in check, EURGBP could resume the slide to the swing low at .8510 or lower.

Stochastic is on the move up to suggest that buyers have the upper hand, so a countertrend bounce may be in order until the near-term resistance levels or until the oscillator reaches the overbought region and turns lower. RSI is also on the move up, so EURGBP could follow suit until overbought conditions are met.

EURGBP could take cues from the flash PMI readings lined up later this week, as strong figures from the euro could dash hopes of immediate ECB easing while downbeat UK data could increase the odds of another BOE cut soon.

Recall that UK CPI and jobs data came in mostly weaker than expected, leading traders to price in another interest rate reduction from the UK central bank in their upcoming meeting, following a narrow vote to ease last time.

Meanwhile, the shared currency could also take advantage of risk-off flows in case global PMI survey results mostly point to increased odds of a slowdown or even a recession.