EUR/GBP Price Analysis: Bears pause as weak UK retail sales lift cross

• The EUR/GBP pair is trading at 0.8584, registering a gain of 0.30%, showing a pause in the bearish momentum.
• Weak UK retail sales figures for December give reason for inflation to ease.
• The general trend of the cross remains bearish.

In the Friday session, the EUR/GBP pair stood at 0.8584, with an appreciation of 0.30%. After two consecutive days of losses, a neutral to bearish outlook persists on the daily chart as the bears take a break. However, on the four-hour chart, there is a change of scenery with the bulls establishing their momentum.

On the fundamentals side, the British pound is seeing significant selling after the Office for National Statistics (ONS) reported a sharp drop in December retail sales. Sales excluding fuel fell 3.3%, well below the expected 0.6% decline. Additionally, the measure excluding fuel decreased by 2.1%, compared to an expected increase of 1.3%. This unexpected decline in retail sales, which includes a 3.2% monthly drop in store sales, is likely to impact the outlook for persistently high inflation, which could push the Bank of England to consider rate cuts sooner. In this sense, if the hardline bets begin to relax, the Pound could find further downward movement.

From a technical point of view, the pair's current position, below the 20, 100 and 200 day SMA, sends a clear signal that the sellers have the upper hand in the overall picture. the markets. The negative slope of the Relative Strength Index (RSI), although in negative territory, indicates an indication of bullish momentum, but may not be enough to nullify the bearish sentiment. Furthermore, the flat red Moving Average Convergence Divergence (MACD) bars imply a stalemate between buyers and sellers, consolidating the bears' control over the direction of the pair. Furthermore, the bears appear to be pausing after two days of sharp losses, underscoring the short-term bearish view.

If we focus on short-term momentum, the four-hour chart presents a somewhat different scenario. Here, although the RSI continues to tilt higher within the negative territory, the momentum built up by the bulls could trigger a wave of buying pressure, while the flat red bars on the MACD also suggest that the bears are taking a breather.

EUR/GBP technical levels

EUR/GBP Daily Chart