EUR/GBP Price Analysis: Bears pause as weak UK Retail Sales lift the pair


  • The EUR/GBP pair trades at 0.8584, recording a 0.30% gain, showcasing a pause in the bearish momentum.
  • Weak Retail Sales figures from the UK from December give reasons for sticky inflation to ease.
  • The overall trend for the cross is still tilted to the downside.

In Friday's session, the EUR/GBP pair was sighted at 0.8584, appreciating by 0.30%. After two consecutive days of losses, a neutral to bearish outlook persists in the daily chart as bears take a pause. However, in the four-hour chart, there's a change of scenery with bulls establishing their momentum.

On the fundamental side, the Pound Sterling is experiencing a significant sell-off following the Office for National Statistics's (ONS) report of a steep drop in December's Retail Sales. Sales, excluding fuel, fell by 3.3%, far below the expected 0.6% decrease. Additionally, the measure that excludes fuel declined by 2.1%, against a forecasted 1.3% rise. This unexpected decrease in Retail Sales, including a 3.2% monthly drop in in-store sales, is likely to impact the persistently high inflation outlook, which may push the Bank of England to consider sooner rate cuts. In that sense, if hawkish bets start to ease, the GBP may find further downside.

Technically speaking, the current position of the pair, sitting below the 20, 100, and 200-day Simple Moving Averages (SMAs), sends a clear signal that sellers hold the upper hand in the broader market outlook. The negative slope of the Relative Strength Index (RSI), even though in negative territory, indicates a hint of upward momentum, but it may not be enough to overturn the bearish sentiment. Additionally, the flat red bars of the Moving Average Convergence Divergence (MACD) entail a stalemate between buyers and sellers, consolidating the bear's control over the pair's direction. Furthermore, the bears seem to be pausing after two days of marked losses, underlining the short-term bearish view.

Shifting the focus to the shorter-term momentum, the four-hour chart presents a somewhat different scenario. Here, even though the RSI is still sloping upward within the negative territory, the gathered momentum by the bulls may spark a bout of buying pressure, while the MACD’s flat red bars also suggest that the bears are taking a breather.

EUR/GBP technical levels

EUR/GBP

Overview
Today last price 0.8583
Today Daily Change 0.0024
Today Daily Change % 0.28
Today daily open 0.8559
 
Trends
Daily SMA20 0.8629
Daily SMA50 0.8643
Daily SMA100 0.8649
Daily SMA200 0.8644
 
Levels
Previous Daily High 0.8592
Previous Daily Low 0.8555
Previous Weekly High 0.8621
Previous Weekly Low 0.8587
Previous Monthly High 0.8715
Previous Monthly Low 0.8549
Daily Fibonacci 38.2% 0.8569
Daily Fibonacci 61.8% 0.8578
Daily Pivot Point S1 0.8546
Daily Pivot Point S2 0.8532
Daily Pivot Point S3 0.8509
Daily Pivot Point R1 0.8582
Daily Pivot Point R2 0.8605
Daily Pivot Point R3 0.8619

 

EUR/GBP daily chart

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