- EUR/GBP is extending downside for 3rd consecutive week, bias lower.
- The pair remains capped below 5-DMA, momentum studies bearish.
- On weekly charts the pair was rejected at major trendline resistance at 0.93 levels and we see rollover of Stochs from overbought levels.
- Technical studies are bearish. RSI and Stochs are sharply lower with scope for further downside.
- Immediate support seen at 0.9031 (50-DMA), further weakness on break below.
- On the flipside, break above 5-DMA could see minor upside till 20-DMA.
- We see upside only on decisive break above 20-DMA. Scope then for re-test of channel top.
- Focus on UK inflation figures, markets expect a small increase in headline inflation to 2.7 percent y/y in August, while core inflation is likely to remain unchanged at 2.4 percent y/y.
Support levels - 0.9068 (23.6% Fib retrace of 0.82970 to 0.93064 rally), 0.9031 (50-DMA), 0.9007 (Aug 10 low)
Resistance levels - 0.9115 (5-DMA), 0.9146 (weekly 5-SMA), 0.9169 (20-DMA)
Call update: Our previous call (http://www.econotimes.com/FxWirePro-EUR-GBP-trades-narrow-range-below-5-DMA-eyes-50-DMA-at-09026-stay-short-892264) has hit TP1.
Recommendation: Bias lower. Stay short for further downside.
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