EURGBP has transitioned from trading in a channel higher, to trading in a sideways range. Resistance in the area around 0.89240 has been confirmed, leading to a selloff down below the moving average cluster in the 4-Hour chart. The 0.88595 support area has been breached today and for now, the 0.88477 level is holding. A loss of this area would target support at 0.88084. This area is important as it is the most recently created higher low. Therefore, a move below it creates a new lower low with the possibility to find support at 0.87917 and attempt to move back higher. On the other hand, if price wants to move lower, the 15th of December low comes into play at 0.87574.
Resistance above can be found at 0.89283, followed by 0.89794 (which is a trend line resistance) and ultimately the 0.90000 round number.
The Bank of Canada is poised to deliver a rate increase of 25bps later today, in an effort to normalise policy and stabilise the economic situation across the country. The Canadian economy has been outperforming for some time and the Housing market barely registered the financial crisis last decade. The risk for the BOC comes in the form of NAFTA, as an interruption could destabilise the current boom and put the economy at risk of recession.
The chart shows a large selloff to support at 1.23545 from the late December high of 1.29193. The rebound higher failed at the 100-period MA in the 4-Hour chart, which has now enabled a trend line to be drawn providing resistance at 1.24983, close to the 1.25000 level. Due to the major event from the BOC today it is worth looking further afield for points of support and resistance, as the volatility generated could overwhelm important levels close to the current price level. The 1.27000 area has been used as support and resistance recently, followed by resistance at 1.27913. Support can be found at 1.23279, the low from late September 2017.