EUR/GBP under pressure testing last week’s low

The EUR/GBP is trading in the lower part of its daily range and testing last week’s low at 0.8727.

The bears are keeping the EUR/GBP cross under pressure since Thursday’s ECB meeting minutes as the report revealed concerns over the sustainability of the inflation in the Eurozone. 

On the other hand, the British pound bulls are focusing on the health of the UK economy and on the prospects of a rate hike in May as investors have put the uncertainties related to the Brexit under the rug. Last month Britain signed a transition agreement which will last 21 months after it leaves the European Union.

No macroeconomic data is scheduled on Monday in both the UK and Eurozone. However, it will be a busy week on the data front especially for the UK. Tuesday will see the closely watched weekly average earnings and the unemployment rate which is expected to dip to another multi-decade low. Meanwhile, Wednesday will see the UK inflation data. While in the Eurozone investors will pay attention to the ZEW survey on Tuesday and the inflation and construction output data on Wednesday. Inflation data in both the UK and Eurozone is a very important piece of data which is expected to bring much volatility as increased inflation (or lack thereof) is going to determine whether the central banks can start hiking interest rates sooner or later.

EUR/GBP technical analysis:

The cross is under pressure. Support lies at 0.8627 which is Friday’s low; after that 0.86 and 0.85 figures should provide support. To the upside, bulls should expect resistance at 0.8670 and 0.8742 swing highs.