EURGBP has been trading between support around the .8300 major psychological mark and resistance just below the .8450 minor psychological level. Price is now down to the bottom of the range, still deciding whether to bounce or to break.

A bounce could take the pair back to the top of the range or at least until the area of interest at the middle near the .8350 minor psychological mark or the dynamic inflection points at the moving averages.

On the subject of moving averages, the 100 SMA is below the 200 SMA to reflect the presence of bearish pressure, favoring a bearish break and a drop that’s the same size as the rectangle pattern. Price is also trading below both SMAs so these could keep holding as dynamic resistance.

However, the gap between the indicators has narrowed to reflect slowing bearish pressure and a potential bullish crossover. Stochastic is also indicating oversold conditions and could be due to turn higher to reflect a return in upside momentum. RSI is inching closer to the oversold region to reflect exhaustion among sellers as well.

Dovish ECB rhetoric has dragged EURGBP lower in the past weeks, although a BOE rate cut in their upcoming policy statement and hints of more to come could bring more downside for sterling. A hawkish BOE cut, on the other hand, could spur a break lower for the pair.

Note that the UK central bank has seen pretty close voting when it comes to easing policy, suggesting some policymakers are comfortable with keeping borrowing costs high for the time being. A shift in rhetoric, however, could open the door for more interest rate cuts and thereby pound weakness.

Note also that the US election results appeared bearish for the euro in anticipation of more trade conflict between the US and Europe during another Trump presidency.