- EUR/GBP slides to 0.8505, posting 0.37% losses as sterling strengthens during Wednesday's trading period.
- Following the UK's CPI, markets foresee diminishing odds for a BoE rate cut in June, bolstering the pound vs the euro.
- The ECB is still considering a potential policy rate cut in June and divergences may favor the Pound.
The EUR/GBP traded lower falling to 0.8505 on Wednesday after the Pound garnered strength following the Office for National Statistics (ONS) releasing inflation data higher than the market's expectations. This pushed down the odds of a June rate cut by the Bank of England (BoE), giving a boost to the sterling.
The Office for National Statistics (ONS) of the UK revealed that in April, the inflation rate dipped to 2.3% year-on-year from 3.2% in March, surpassing market expectations of 2.1%, while the core CPI, excluding volatile food and energy prices, rose to 3.9% against an expected 3.6%. As a reaction, forecasts for a Bank of England (BoE) rate cut in June declined sharply from 50% to 12% following the inflation announcement, and those hawkish bets seem to have benefited the Pound.
On the other hand, the European Central Bank (ECB) officials are confident that inflation is under control and are gearing up for a first cut in June. In that sense, in case the BoE and ECB diverge with the British bank delaying cuts, could lay the ground for further downside .
EUR/GBP technical analysis
Examining the daily chart, the Relative Strength Index (RSI) indicates a negative trend, with its most recent value edging towards the oversold territory. Further supporting this bearish outlook is the Moving Average Convergence Divergence (MACD) as it illustrates rising red bars, revealing a rising negative momentum.
EUR/GBP daily chart
Looking at the broader market perspective, the EUR/GBP finds itself in a challenging position in relation to its Simple Moving Averages (SMA), hinting towards a potential further decline. Currently, the alignment is below the 20, 100, and 200-day SMAs. This traditionally suggests a bearish tilt, which is further reinforced by Wednesday’s downward movement.
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
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.