Forex Focus
The EUR to GBP (EURGBP) pair is unchanged as traders react to the mixed data from the United Kingdom and Germany. The pair is trading at 0.9040, which is sharply higher than yesterday’s low of 0.8937.
The EURGBP pair is reacting to the inflation data from Germany. According to Destatis, the country’s headline consumer price index rose to 0.9% in June, which is a slight improvement from May’s 0.6%. On a month-on-month basis, the CPI rose to 0.6% from the previous decline of -0.1%. The harmonised consumer price index rose to 0.8% from the previous 0.5%.
These numbers show that the German economy is improving slightly as the country reopens. Still, the biggest contributor to the euro’s movement is the upcoming ECB interest rate decision and the Friday’s European Commission meeting.
The EUR to GBP pair is also reacting to the important economic data from the United Kingdom. According to the Office of National Statistics (ONS), the country’s manufacturing production declined by 23.9% in May after falling by 28.5% in April. On a MoM basis, the production rose by 8.4% after falling by 24.3% in the previous month. That improvement was mostly because the country eased some of the social distancing measures in May.
The industrial production declined by an annualised rate of 20.0% after falling by 24.4% in the previous month. As with the manufacturing data, the industrial production rose by 8.4% on a month on month basis.
The construction sector also made some improvement in May. Output jumped by 8.5%% after falling by a whopping 40.1% in the previous month. As a result, the economy expanded by 1.8% after falling by 20.4% in April.
The EURGBP pair is slightly in the green today. It is trading at 0.9040, which is slightly higher than the 50-day and 100-day exponential moving averages. It is also slightly above he 61.8% Fibonacci retracement level. The price is also slightly below the ascending trend line that is shown in purple. This means that the pair is attempting to move back to the ascending channel as shown below.
Therefore, if it moves into the channel, I expect the price to continue rising as bulls aim at the next resistance level at 0.9200.
On the flip side, a move below 0.9000 will invalidate this trend. This price is an important psychological level.