EUR/GBP is trading on the front foot around 0.8950, supported by the upbeat German regional CPIs.
The Brandenberg July CPI came-in at 0.4% m/m, compared to the previous figure of 0.2%. This is keeping the EUR well bid.
Candles with long tails highlight dip demand
The previous two daily candles carry a long lower body/shadow, suggesting a strong dip demand for the EUR. The cross may extend gains to 0.90 handle if the preliminary German CPI number beats estimates. Moreover, strong German CPI reading would ensure the EUR/USD remains relatively resilient following (possible) upbeat US GDP.
On the other hand, a weaker-than-expected German CPI release would open doors for a 0.89 handle.
EUR/GBP Technical Levels
A break above 0.8959 (July 25 high) would open doors for 0.90 (psychological level) and 0.9049 (Nov 2016 high). On the downside, support is seen at 0.8930 (1-hour 50-MA) ahead of 0.8916 (1-hour 200-MA) and 0.89 (psychological level).
The 14-day RSI is bullish and well short of the overbought territory, which suggests scope for a rally to 0.90 handle.
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