EUR/GBP remains below 0.8650, close to its low of the year after the German CPI

• EUR/GBP falls lower for the fourth day in a row and hits a new year-to-date low on Wednesday.
  Softer consumer inflation figures from France and Germany weigh on the shared currency.
• Expectations of further BoE rate hikes contribute to sterling’s outperformance.

The crossing EUR/GBP extends its downtrend for the fourth day in a row and falls to a new yearly low during the first half of trading on Wednesday. The cross, however, manages to rally a few pips during the European session and is currently trading around the 0.8635 region, down 0.15% on the day.

The shared currency is shifting lower on weaker consumer inflation figures from the Eurozone’s two largest economies, Germany and France, and turns out to be a key factor weighing on the EUR/GBP cross. In fact, the headline German CPI disappointed consensus estimates, slowing to 6.1% year-on-year in May from 7.2% the previous month. Earlier, the French CPI also surprised to the downside, falling 0.1%m/m in May, marking a sharp contraction from the previous month’s reading of 0.6%. This fuels speculation that the European Central Bank (ECB) may slow the pace of its tightening, which, in turn, is seen as undermining the Euro.

Conversely, investors remain concerned about the possibility of the Bank of England (BoE) raising interest rates further, buoyed by stronger-than-expected consumer inflation figures released last week. This further contributes to the relative outperformance of the British Pound against its European counterpart and is seen as another factor dragging the EUR/GBP lower. That being said, a strong rally in the US dollar (USD) is preventing sterling bulls from making aggressive bets and helping to limit the cross’s losses, at least for now.

Even from a technical perspective, the RSI on the daily chart has moved to the brink of entering oversold territory. This makes it prudent to wait for a short-term consolidation or modest bounce before positioning for any further short-term depreciation moves. However, the aforementioned fundamental backdrop seems to be leaning firmly in favor of bearish traders, suggesting that any rally attempt could still be seen as a selling opportunity and risks moderating rather quickly.

technical levels

GENERAL DESCRIPTION

Today last price 0.8634
Today Daily Change -0.0013
Today Daily Change % -0.15
Today open daily 0.8647

TRENDS

Daily SMA20 0.8701
SMA50 daily 0.8764
SMA100 daily 0.88
SMA200 daily 0.8753

LEVELS

Previous daily high 0.8674
Previous daily low 0.8628
Previous weekly high 0.8719
Previous weekly low 0.8649
Previous monthly high 0.8875
Previous monthly low 0.8729
Daily Fibonacci 38.2% 0.8646
Daily Fibonacci 61.8% 0.8657
S1 Daily Pivot Point 0.8626
S2 Daily Pivot Point 0.8604
S3 Daily Pivot Point 0.858
Daily pivot point R1 0.8671
Daily pivot point R2 0.8695
Daily pivot point R3 0.8717