- EUR/GBP sees sideways in a 40-pip range broadly ahead of German Retail Sales.
- A surprise decline in Eurozone inflation has weakened hawkish ECB bets.
- The sentiment of UK households was dampened as food inflation soared to a 45-year high.
The EUR/GBP pair has picked bids after dropping to near 0.8620 in the Asian session. The asset has been broadly sideways in a 0.8620-0.8660 range for the past three trading sessions despite a decline in the Eurozone Harmonized Index of Consumer Prices (HICP). A recovery move in the cross is feeble for now and requires more filters to be stronger.
On Wednesday, the headline Eurozone HICP released lower at 10.0% than the expectations of 10.4% and the prior release of 10.6%. Ease in energy prices after electrifying moves resulted in a slowdown in inflationary pressures, while food prices are still solid in the Eurozone economy. The core HICP numbers remained flat at 5.0% due to supply chain bottlenecks.
Meanwhile, the European Central Bank (ECB) policymakers are worried about wage increments. At a point of time when inflationary pressures will cool down, higher wages will stay, which could de-anchor long-term inflation expectations.
A decline in the preliminary November inflation report has cemented a drop in rate hike extent to 50 basis points (bps), as suggested by Commerzbank.
Also, an unfavorable German unemployment report supports a decline in an interest rate hike by the ECB in its December monetary policy meeting.
Going forward, investors will keep an eye on German Retail Sales data. The economic data is expected to expand its contraction to 2.8% vs. a prior contraction of 0.9% on an annual basis. Also, monthly figures are expected to contract by 0.6% against an expansion of 0.9%. A decline in retail demand will delight ECB policymakers.
On the United Kingdom front, 45-year high annual growth in food inflation to 12.4% in November, released by the British Retail Consortium (BRC), has dampened sentiment of households as they will be unable to offset higher food prices with subdued earnings.
Responding to the figures, BRC chief executive Helen Dickinson said: “Winter looks increasingly bleak as pressures on prices continue unabated”, as reported by Financial Times. This might impact Pound Sterling ahead.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD continues to juggle below 0.6660 ahead of Australian Retail Sales and CPI data
The AUD/USD pair is demonstrating a back-and-forth action below 0.6660 from Friday’s session. The sideways performance in the Aussie asset is expected to conclude and a power-pack action will be witnessed.
EUR/USD bulls attack 1.0800 amid risk-on mood, focus on ECB’s Lagarde, US Consumer Confidence
EUR/USD extends the week-start recovery to 1.0800 during early Asian session on Tuesday, picking up bids to refresh the intraday high of late, as the risk-on mood joins the hawkish comments from the European Central Bank (ECB) officials.
Gold faces resistance around $1,960 as US banking jitters ease, Yields soar
Gold is juggling below $1,960.00 in the early Asian session. The upside for the Gold price seems restricted as fears of the United States banking debacle have eased. Therefore, investors have liquidated their positions in Gold and US government bonds.
This is how EOS holders responded to the network's EVM testnet launch, what to expect this week
The first milestone on the EOS Network Foundation’s roadmap, the completion of the EOS EVM (Ethereum Virtual Machine) code, was achieved on March 22, starting the countdown to the launch of the EOS testnet.
US Consumer Confidence Preview: No good news for Americans Premium
The United States will publish the March Conference Board Consumer Confidence index, and market players anticipate it has contracted to 101 from 102.9 in February.