EUR/GBP snaps five-day losing streak above 0.8500 on softer UK Retail Sales, mid-tier Eurozone data eyed
|- EUR/GBP extends recovery from the lowest level in five weeks after downside UK Retail Sales data.
- UK Retail Sales dropped -1.2% MoM, -3.2% YoY while Core Retail Sales disappoints.
- Recently upbeat EU/German data tames market’s fears of recession in the bloc, underpinning the corrective bounce.
- Final readings of EU Inflation for July, ECB’s Lane will entertain intraday traders, Jackson Hole Symposium in the spotlight afterward.
EUR/GBP picks up bids to extend the intraday high near 0.8545 as it cheers the downbeat UK data amid early Friday morning in London. In doing so, the cross-currency pair also benefits from the recently easing fears about the economic slowdown in Eurozone and Germany. Above all, sluggish markets and cautious mood ahead of the next week’s key events allow the quote to print the first daily gains in six while bouncing off the lowest level in five weeks.
UK Retail Sales dropped to -1.4% YoY in July versus -2.1% expected and -1.0% prior whereas the Retail Sales ex-Fuel, also known as the Core Retail Sales, slumped to -3.4% on the yearly basis compared to -2.2% market forecasts and -0.9% marked in June.
On the other hand, the Eurozone trade surplus improved seasonally adjusted (s.a) and non-seasonally adjusted (n.s.a) for June. That said, the former grew to €12.5B while the latter rose to €23B versus €0.2B and €-0.3B respective priors. Earlier in the week, Eurozone Industrial Production marked a surprise growth for June but the second readings of the Eurozone Gross Domestic Product (GDP) for the second quarter (Q2) confirmed initial forecasts whereas the Employment Change eased for the said period.
It’s worth noting that the market’s cautious mood ahead of the next week’s annual event at the Jackson Hole Symposium, where the top-tier central bankers speak, allows the EUR/GBP to pare weekly losses.
Looking ahead, the final readings of Eurozone inflation for July and a speech from the European Central Bank (ECB) Chief Economist Philip Lane will be crucial to follow.
Technical analysis
A clear upside break of 0.8545 resistance confluence, comprising a one-week-old descending trend line and late July’s swing low, becomes necessary for the EUR/GBP buyers to keep the reins. Otherwise, the multi-month low marked the last week around 0.8500 stays on the trader’s radar.
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