After a sharp sell-off following the disappointing German GDP report yesterday, EURGBP has been able to recoup most of its losses. The currency pair fell from an intraday high of 0.9077 to a low of 0.9015. As of this writing, EURGBP is trading at 0.9055.
According to data for Q2 2020, the German economy contracted by 10.1%. This was more than the 9.0% slowdown that analysts had anticipated for the month. However, it could be that the news about some parts of the UK going back to lockdown is weighing down the pound. According to the government, movement in Greater Manchester, East Lancashire, and parts of West Yorkshire will need to be limited again.
On the 1-hour time frame, it can be seen that EURGBP has been trading on a downtrend. This is evidenced by the fact that the currency pair has been trading within a descending channel since late July. As of this writing, EURGBP is testing a confluence of resistance. For one, it is trading around the top of the descending channel. Secondly, when you draw the Fibonacci retracement tool from the high of July 29 to the low of July 30, it can be seen that the area around 0.9050 also coincides with the 50% Fib level.
Reversal candlesticks around this price may mean that there are still sellers left in the market. Should this be the case, EURGBP may soon fall to the bottom of the channel around 0.9005.
On the other hand, a strong bullish close above 0.9065 may mean that EURGBP may soon trade higher. Near-term resistance for the currency pair is at 0.9080 where it could test the 100 SMA and 200 SMA.
EURGBP, 4-Hour Chart