EURGBP was previously moving sideways inside its range, with support at the .8500 mark and resistance at .8675. Price busted through the resistance and might be due for a retest from here.
Using the Fibonacci retracement tool on the latest swing low and high shows that the 38.2% level lines up with the broken range resistance. This is also around the 100 SMA dynamic support that could add to its strength as a potential floor.
On the subject of moving averages, the 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. Then again, these moving averages might still be oscillating to reflect consolidation action.
Still, the 200 SMA is close to the 50% Fib and might also serve as dynamic support in a larger correction. RSI has been indicating overbought conditions for quite some time and looks ready to turn lower to indicate that sellers might take the upper hand. Similarly stochastic has been in the overbought region for quite some time and might be moving south to show that bearish momentum is returning.
The pound was under heavy selling pressure last week on account of Brexit developments. Another meaningful vote could take place next month but there have been no major changes to the deal, so approval doesn’t seem likely.
In that case, this would mean another crushing blow to PM May’s leadership, which might then force her to resign and name her successor. This change would take place around four months before the EU deadline on October 31, leaving not much time to come up with a transition deal.
Meanwhile, UK event risks this week include the CPI release, BOE Inflation Report hearings, and retail sales report. As for the euro, flash PMI readings are due, along with the ECB meeting minutes.