EUR/GBP testing higher waters near 0.8650 after UK CPI miss

The EUR/GBP is catching some lift on the back of softer-than-expected UK inflation data.
The week is still heavy on the economic calendar, with UK and EU PMI figures still in the barrel.
The BoE is set for one last rate hike on Thursday.

Joshua Gibson FXStreet

The EUR/GBP caught a bump higher during Wednesday trading after the United Kingdom’s (UK) inflation reading came in below market expectations, sending the Pound Sterling (GBP) lower and giving the Euro (EUR) a leg up.

The Euro-Pound pair lifted from the day’s open near 0.8620 after the UK’s Consumer Price Index (CPI) figures broadly missed the mark, with August’s CPI reading coming in at just 0.3%, versus the forecast 0.7%.

The previous month’s CPI declined by 0.4%, and markets are readjusting their Pound Sterling bets as the Bank of England (BoE) is set to give just one more rate hike this cycle.

The BoE is slated to give its latest rate call at 11:00 GMT on Thursday, where the central bank is broadly expected to raise its benchmark interest rate to 5.5% from 5.25. Inflation has proven to be a sticky point for the UK’s domestic economy, but the last round of inflation figures means the rate of price increases has begun to slow.

UK inflation slows down, BoE to be pressured off rate hike cycle

GBP traders will want to reassess inflation expectations and what that could mean for the rate hike cycle moving forward.

On the economic calendar, The BoE will be followed up by Retail Sales and Purchasing Manager Index (PMI) figures on Friday, where the EU will also see September’s preliminary PMIs.

UK Retail Sales are expected to rebound to 0.5% from the last reading of -1.2%, while the UK PMI composite is seen ticking up slightly from 48.6 to 48.7.

On the EUR side, pan-EU composite PMI figures are forecast to slide from 46.7 to 46.5.

If market data comes in at expectations, it could challenge the Euro’s current position on the charts.

EUR/GBP technical outlook

The EUR/GBP’s Wednesday bounce takes the pair firmly up through the 0.8640 level, and is currently cycling the 0.8650 level as traders look for further momentum.

A rising trendline is currently baking into the charts on the hourly candles, with the 34-hour Exponential Moving Average (EMA) rising into 0.8635.

On the daily candles, The Euro is set to confirm a break of the descending trendline from July’s swing high into the 0.8700 handle. The 200-day Simple Moving Average (SMA) currently sits just beyond, parked near 0.8710

EUR/GBP technical levels

EUR/GBP

Overview
Today last price	0.8646
Today Daily Change	0.0028
Today Daily Change %	0.32
Today daily open	0.8618

Trends
Daily SMA20	0.8582
Daily SMA50	0.8588
Daily SMA100	0.8607
Daily SMA200	0.8712

Levels
Previous Daily High	0.8637
Previous Daily Low	0.8615
Previous Weekly High	0.8631
Previous Weekly Low	0.8558
Previous Monthly High	0.8669
Previous Monthly Low	0.8493
Daily Fibonacci 38.2%	0.8623
Daily Fibonacci 61.8%	0.8629
Daily Pivot Point S1	0.861
Daily Pivot Point S2	0.8602
Daily Pivot Point S3	0.8588
Daily Pivot Point R1	0.8631
Daily Pivot Point R2	0.8645
Daily Pivot Point R3	0.8652

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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