EUR/GBP retreats near 0.8675, as the Euro eyes a bearish trend

• The EUR/GBP remains range-bound after falling to a low of 0.8660 on Wednesday.
• The euro’s consolidation zone against sterling remains intact, as the 0.8700 zone is difficult to reach.
• UK inflation remains above expectations, ECB’s Lagarde points to high wages.

The pair EUR/GBP fell from the day’s opening bids at 0.8680 to an intraday low of 0.8660 before bouncing off 0.8670 as the Euro (EUR) writhes against the British Pound (GBP).

UK Consumer Price Index (CPI) inflation exceeded expectations and remained at 6.7% annually through September, against a forecast decline of 6.5%. Monthly CPI inflation experienced a slight rebound, standing at 0.5% compared to 0.4% in August.

UK annualized core CPI inflation (excluding food and energy price volatility) also beat expectations, at 6.1% in September versus 6.2% in August, versus the median forecast of 6.0%.

As regards the EU, the Harmonized Index of Consumer Prices (HICP) for September stood at 0.3%, confirming forecasts.

European Central Bank (ECB) President Christine Lagarde noted on Wednesday that core inflation remains quite strong, with wage growth “historically high.” Despite inflation concerns, ECB President Lagarde noted that worsening demand remains a critical downside risk.

EUR/GBP Technical Outlook

The EUR/GBP pair is approaching the 200-day SMA near the upper end of the medium-term consolidation in the 0.8700 area, and the main price level will remain an important limit for the Euro pair -Pound if the bulls are unable to extend the latest bullish bounce from 0.8620.

The EUR/GBP pair initially fell to 0.8525 in June, and has since struggled to develop a significant trend, bouncing between 0.8525 and 0.8700.

An upward trend correction would see the EUR/GBP pair challenge the late April high at 0.8850.

Dario EUR/GBP Chart

EUR/GBP technical levels