The British pound was seen trading volatile last week as investors adjusted their views on the currency as the developments in regards to Brexit kept unfolding.

While the pound sterling managed to initially gain on the positive developments that the UK had agreed to the Brexit bill with the EU counterparts, the failure to make a decision on the Irish border saw the bound paring gains as a result.

However, despite the volatility, as we continue to watch the EURGBP currency, the signs indicate a potential break down in price in the near term.

EURGBP has been the focus ever since the Brexit vote in June 2016.

This eventually send the euro surging to levels close to 0.90 against the pound sterling. However, price action was seen quickly paring gains as the current consolidation has turned into a technical bearish flag.

This potentially signals a downside bias in price. In recent times, the economic data from the eurozone remained strong which helped prices to turn stronger.

However, with a weak inflation growth rate, the euro was seen turning weaker as a result.

Looking ahead, we expect EURGBP to essentially post a decline below the 0.8773 region. The break down from this support level which remains strong currently could signal a correction towards the 0.8471 as the initial target.

There is scope for EURGBP to eventuallly slip towards the support level near 0.8386. This would mark a completion in the currency pair in the short term.