EURGBP might be ready for a reversal from its downtrend, as the pair is forming an inverted head and shoulders pattern. Price is testing the neckline resistance, and a break higher could set off a rally that’s the same height as the formation.

The 100 SMA is still below the 200 SMA, though, suggesting that the path of least resistance is to the downside. In other words, EURGBP might still resume the slide to the lows close to the .8500 major psychological mark.

Price is also trading around the moving averages, still deciding whether these might hold as dynamic resistance levels around the .8550 minor psychological mark or not.

Stochastic is on the move down to show that bearish pressure is present, and the oscillator has room to drop before reaching the oversold region to signal exhaustion among sellers.

RSI is also pointing down to suggest that bearish pressure might pick up, even though the oscillator hasn’t quite reached the overbought zone just yet.

EURGBP could take cues from eurozone PMI figures due later today, as the German preliminary CPI is lined up soon and might show a 0.5% monthly uptick in price pressures versus the earlier 0.2% gain.

The French preliminary CPI due later on could print a 0.7% monthly rebound in inflation after the previous 0.2% dip while the Spanish flash CPI might fall from 3.4% year-over-year to 2.8%.

Stronger than expected results could dampen ECB easing hopes, possibly leading to a relief rally for the euro. On the other hand, weak data could lead to stronger rate cut bets soon, likely allowing the EURGBP downtrend to resume.

There are no major reports out of the UK today, but it’s worth noting that the BOE might also be shifting to a less hawkish stance soon. Still, the UK central bank might have no choice but to keep policy restrictive for much longer in order to ward off stubborn inflation in their economy.