EUR/GBP Drifts lower

EUR/GBP closed last week few pips below the psychological barrier at 0.8800. Bulls once again failed just below this level but moreover sharply retreated and currently the pair is forming a fresh weekly low at 0.8737. A new portion of weakness in the the single currency was served by the ongoing Italian job as the government formation talks collapsed.
Technically speaking the short-term outlook remains neutral to bearish. On the four hour time frame the price has crossed to below its moving averages and all of them had lost directional strength. RSI and stochastic are showing strong bearish momentum although are still far from oversold readings.

The downside is supported by 0.8730 area, but a sustained weakness below it will lead to a subsequent drop towards the 61.8% Fibonacci retracement of 2017 bullish run at 0.8690. This level has been tested but rejected several times during the last year, so in case of breaking it next bearish target will be offered by the April low at 0.8620. The upside remains capped by the 0.8800 handle which is so hard to fight during the last two weeks. However, once taken will open door for testing the resistance around 0.8840 area.