In my previous market update, I mentioned a chart setup in EUR/GBP which was forming and looked like a bearish setup.

The 100 SMA (green) in particular is providing solid resistance

Looking at the hourly forex chart, we see that this pair has been trading in a downtrend for the last couple of weeks, so we’re in the right direction.

This morning though, we are seeing this forex pair climb higher amid some Euro strength, but to me, this is just a mere retrace of the downtrend.   

EUR/GBP has climbed around 40 pips since last night and has bumped into a couple of moving averages. The 200 (purple) and the 100 (green) moving averages are providing resistance on top and the price seems to be having difficulties taking them out.

Besides that, the hourly chart is overbought with stochastic at the top of the range and the H4 chart is almost overbought as well.

The risk for us is the ECB which will deliver its statement in a while. That can take the Euro in either direction, but the downside is more favorable, given the recent strength in the single currency.