EURGBP has been trending lower, moving inside a descending channel connecting the latest highs and lows on the 4-hour time frame. Price is currently testing the resistance near the .8500 major psychological level and might be due for a move back towards the channel support at .8400 or lower.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 100 SMA lines up with the channel resistance and is holding as a dynamic inflection point at the moment.
Stochastic is already turning lower from the overbought zone so selling pressure is kicking in, also confirming that a move towards the channel support is likely. However, if price still pops higher, the 200 SMA dynamic resistance at .8550 could keep gains in check.
The main event risk for the UK is the outcome of the Brexit debates in the House of Lords. UK PMI readings from the construction and services industries are also lined up and downbeat results or signs of a slowdown could mean more losses for the pound.
Scottish referendum talks are also weighing on sterling at the moment since this could add fresh issues to the already complicated Brexit negotiations. Scottish FM Sturgeon mentioned that they might call for a vote in reaction to the UK’s triggering of Article 50 by March.
Meanwhile, the euro is also under some selling pressure due to the happenings in French politics. Polls are suggesting that Macron could widen his lead against Le Pen and diminish odds of a Frexit, which could spark increased uncertainty in the region. French consumer spending, preliminary CPI and GDP readings are due today.