EUR/GBP Price Forecast: Finds temporary support near 0.8550 ahead of UK data
- EUR/GBP finds interim cushion near 0.8550 with investors focusing on the UK data.
- UK’s Average Earnings Excluding Bonuses are estimated to have declined to 4.6% from the prior release of 5.7%.
- EUR/GBP is on the verge of delivering a Falling Wedge breakout.
The EUR/GBP pair discovers a temporary support near 0.8550 in Monday’s European session after a two-day correction from a more than three-month high of 0.8625. The asset finds support as the Pound Sterling (GBP) gains strength, with investors focusing on the United Kingdom Employment data for three-months-ending July and the consumer inflation data for July, which will be published on Tuesday and Wednesday.
The economic data will indicate whether the Bank of England (BoE) will deliver subsequent rate cuts in September. From the UK Employment report, the ILO Unemployment Rate is expected to have increased to 4.5% from the prior release of 4.4%. Average Earnings Excluding Bonuses are estimated to have decelerated significantly to 4.6% from 5.7% in three-months ending May.
A higher jobless rate and slowing wage growth momentum would dampen the Pound Sterling’s appeal, as they will boost expectations of more BoE rate cuts.
Meanwhile, the next move in the Euro (EUR) will be influenced by market speculation for European Central Bank (ECB) rate cuts. In the last monetary policy meeting, ECB President Christine Lagarde announced a steady interest rate decision but kept doors for the September meeting widely open.
EUR/GBP gathers strength to deliver a breakout of the Falling Wedge chart pattern formation on a daily timeframe. A breakout of the same results in a bullish reversal. The 200-day Exponential Moving Average (EMA) near 0.8540 acts as a major cushion for the Euro bulls.
The 14-day Relative Strength Index (RSI) shifts inside the 60.00-80.00 range for the first time in more than three months. If the RSI sustains above 60.00, a bullish momentum will trigger.
More upside would appear if the asset breaks above August 8 high at 0.8625. This would drive the asset towards January 2 high at 0.8683, followed by 28 December 2023 high at 0.8615.
In an alternate scenario, a downside move below the psychological support of 0.8500 would expose the asset to August 2 low at 0.8466 and the round-level support of 0.8400.
EUR/GBP daily chart
Economic Indicator
Average Earnings Excluding Bonus (3Mo/Yr)
The Average Earnings Excluding Bonus release is a key short-term indicator of how levels of pay are changing within the UK economy; it is released by the UK Office of National Statistics. It can be seen as a measure of growth in "basic pay". Generally, a positive result is seen as bullish for the Pound Sterling (GBP), whereas a low reading is seen as bearish.
Read more.Next release: Tue Aug 13, 2024 06:00
Frequency: Monthly
Consensus: 4.6%
Previous: 5.7%
Source: Office for National Statistics
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
