FxWirePro: EUR/GBP Daily Outlook

Chart - Courtesy Trading View 

Spot Analysis:

EUR/GBP was trading 0.20% higher on the day at 0.8366 at around 10:15 GMT.

Previous Week's High/ Low: 0.8524/ 0.8345

Previous Session's High/ Low: 0.8400/ 0.8339

Fundamental Overview:

Data released by Eurostat earlier on Wednesday showed Eurozone’s Retail Sales fell by 1.2% MoM in June versus 0.0% expected and 0.4% last.

On an annualized basis, the bloc’s Retail Sales came in at -3.7% in June versus 0.4% recorded in May and -1.7% estimated.

Eurozone’s Producer Price Index (PPI) arrived at 35.8% and 1.1%, YoY and MoM respectively. Both readings beating market expectations.

On the other side, seasonally adjusted S&P Global/CIPS UK Services Purchasing Managers’ Index (PMI) was revised lower to 52.6 in July versus 53.3 expected and 53.3 – last month’s flash reading.

The Composite PMI arrived at 52.1 in July vs. 52.8 expected and 52.8 previous reading. 

The Bank of England (BoE) is scheduled to announce its monetary policy decision on Thursday and is expected to hike interest rates by 50 bps.

The markets, however, seem divided over further rate hikes. Hence, the focus would be on the near-term policy outlook, which will influence price action in the British pound.

Technical Analysis:

- EUR/GBP upside capped at 5-DMA

- Momentum is bearish, stochs and RSI are sharply lower

- MACD and ADX support downside in the pair

- GMMA indicator shows major and minor trend are bearish

Major Support and Resistance Levels:

Support - 0.8334 (Lower BB), Resistance - 0.8368 (5-DMA)

Summary: EUR/GBP recovery lacks traction. BoE policy decision in focus for further impetus. Bearish invalidation only above 200-DMA.