The British pound traded lower against the Euro during this past week, but it looks like there is a chance of a short-term correction. The EURGBP pair after climbing as high as 0.7983 traded a touch lower towards the 0.7950 level. There is a chance that the pair might correct a bit more from the current levels.
Fundamentally, the Euro zone services PMI data was published by the Eurostat about an hour ago. The outcome was below the market expectations, as the Euro zone services PMI came in at 54.2, missing the forecast of 54.4. However, it jumped from 52.8 to 54.2. The Euro was seen trading lower after the release against the US dollar and the British pound.
Currently, the EURGBP pair is flirting with the 23.6% fib retracement level of the last move higher from the 0.7874 low to 0.7983 high. However, the hourly RSI is below the 50 mark, so there is a chance that the pair might dip towards the 38.2% fib level at 0.7941.
The mentioned fib level also coincides with a bullish trend line as highlighted in the hourly chart. So, if the pair moves a bit lower from the current levels, then there is a high probability that the Euro buyers might emerge to take the pair higher again. Moreover, the 100 hourly moving average is aligning around the 0.7940 level, which increase the importance of mentioned support area.
Alternatively, if the pair continues trading higher from the current levels, then initial resistance can be seen around the last high of 0.7980. Any further gains might take the pair closer to the 0.8000 resistance area.
Posted By Simon Ji of IKOFX
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