EURGBP edged sharply lower over the last hours and recorded a fresh 5-week low of 0.8710. When looking at the bigger picture the pair has been trading within a downward sloping channel since October 2017. The short-term technical indicators are bearish and point to more weakness in the market.
Looking at the 4-hour chart, prices are looking capped by the 20 and 40 simple moving averages which are negatively aligned after a bearish crossover that took place on January 18. Furthermore, the RSI indicator has entered the negative zone, whilst the MACD oscillator is ready to post a downward cross with its trigger line in the bearish territory.
Further losses could see the December 8 low of 0.8690 acting as a major support. A drop below the aforementioned obstacle would reinforce the bearish structure in the short-term and open the way towards the next key support level of 0.8635, which is near with the lower band of the downward sloping channel.
In the event of an upside reversal, the 0.8760 level could act as a strong barrier before being able to re-challenge the 0.8800 handle.
