EURGBP jumps to daily high after the United Kingdom Consumer Price Index came in at 1.3% below consensus of 1.5% in December. The monthly CPI registered at 0%, also below the forecasts of 0.2%. Meanwhile the Core CPI came in at 1.4%, below estimates of 1.7% for December. The weak CPI data might increase the possibility for a rate cut in January, even in my view the current state of the economy doesn’t require yet an urgent action as the political situation is more clear now and will help the economy in the upcoming months.
In a speech earlier today BOE’s Saunders added to dovish rhetoric from Carney, Vlieghe and Tenreyo. Saunders said that aggressive steps needed given the limited monetary policy space. He also said it would be appropriate to maintain an expaaansionary policy stance and possibly to cut rates further. Economic growth is sluggish while he sees an extended period of subdued growth as Brexit uncertainty may continue.
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EURGBP recovers morning losses and turned higher after the weaker CPI. Yesterday the pair retreated from two-month highs that hit after the dismal UK economic data. As of writing the pair is 0.28% higher 0.8567 close to daily high.
On the upside initial resistance for EURGBP will be met at 0.8571 the daily high. Yesterday’s high will provide the next resistance at 0.8596. A break above that resistance will open the way for the next resistance at 0.8674 the 100-day moving average.
On the downside, immediate support for the EURGBP will be met at 0.8537 the daily low. More offers might emerge at 0.8520 the 50-day moving average. 2020 low at 0.8448 is the next support area.