EUR/GBP nearing the multi-month range low post-UK CPI

• UK CPI and retail sales data come in lower than expected.
• ZEW survey confidence plummets to its lower level since 2016.

The EUR/GBP is trading at around 0.8765 down down 0.34% so far as UK CPI and retail sales data come in lower than expected. Monday saw the EUR/GBP took a big dive with GBP bulls pushing the pair below the 0.8750 level while increasing its daily range to 71 pips while the EUR/GBP usually moves in a 52-pip range in the last 14 days of trading. The catalyst on Monday was the UK agreeing on a 21-month Brexit transition period. The U.K. will stay in the EU until the end of 2020 with limited powers. 
During the transition period, European laws will still be applied in the U.K. However, the British government won't have any decision-making power when it comes down to the future of the European Union. 

Earlier in the European session, the UK CPI decelerated to 2.7% y/y in February while core inflation decelerated to 2.4% y/y. retail sales also disappointed y/y coming out at 3.6% vs 3.7% expected while m/m data in February came in line at 0.8%. However according to ING: “core inflation could be more-or-less back to target by the summer”

The European session also saw the ZEW index plummet to its lowest level since late 2016. The index measures investors’ confidence and decreased to 5.1 in March from 17.8 saw earlier in February. 

“The stock market turmoil of the last two months, including a rollercoaster ride of bond yields, the stronger euro since the beginning of the year as well as political events seem to have dented investors’ enthusiasm. The sworn-in new government in Berlin has not (yet) been able to offset recent market and global political turbulence.” according to ING analysts. 

EUR/GBP daily chart:

The EUR/GBP is trading within yesterday’range and is continuing its descent with bears now eying the 0.8700 support which has been holding since June 2017. If the level is broken the next likely support become the 0.8600 figure followed by 0.8500. Resistance is now seen at 0.8800, which is the 50% Fibonacci retracement from the April-August 2017 bull run. 

EUR/GBP 15-minute chart:

The EUR/GBP found some intraday resistance at the 0.8760 level close to the S1 pivot. The market has been declining since Asia but the momentum cannot be compared with Monday’s decline as the RSI is decelerating. Support is seen in the 0.8720 region close to the S2 pivot while resistance is seen at 0.8790 daily pivot and 100-period simple moving average, followed by 0.8820 Monday’s high.