EUR/GBP Advances on Weak UK Inflation Data

Traders' Opinions

Summary:

EUR/GBP climbed for a sixth straight session as weak UK inflation and fiscal concerns weighed on the Pound, while investors awaited the ECB's policy decision for fresh direction.

BUY EURGBP

EXP

TRADING

0.85315

Entry Price

0.86200

0.84500

0.85327 +0.00029 +0.03%

0.0

Pips

Flat

0.84500

Exit Price

0.85315

Entry Price

0.86200

The Euro strengthened for a sixth consecutive session against the British Pound on Thursday, with EUR/GBP testing the 0.8645 area as Sterling remained under pressure from fading Bank of England rate hike expectations and growing concerns over the UK's fiscal outlook.

The Pound has underperformed across the board after softer-than-expected UK inflation data reinforced expectations that the BoE could delay further policy tightening. At the same time, investors have become increasingly cautious over Prime Minister Andrew Burnham's spending plans, raising questions about how the government intends to finance its fiscal commitments.

Attention has now shifted to the European Central Bank's policy decision, where officials are widely expected to leave interest rates unchanged while maintaining a hawkish bias. Analysts at Commerzbank continue to expect the ECB's next rate increase to come in September, provided inflation remains elevated and incoming economic projections support further tightening.

Technical Analysis

EUR/GBP is showing early signs of a bullish reversal after breaking above its multi-week descending channel. On the 4-hour chart, the pair has pushed through the channel resistance and is now consolidating above the 0.8520–0.8530 support zone, suggesting that buyers are beginning to regain control. The successful breakout marks a shift in market structure, with the recent series of higher lows reinforcing the improving bullish outlook.

The 0.8520 area is now the key level to watch. As long as price remains above this former resistance, the breakout remains valid and buyers are likely to target the next major resistance around 0.8620, where a significant supply zone is located. A sustained move above that level would strengthen the bullish case and open the door for a continuation toward higher levels. On the downside, a break back below 0.8520 would signal that bullish momentum is fading and could see the pair retest the 0.8460 support area.

Momentum indicators are gradually turning in favor of the bulls. The Relative Strength Index (RSI) has recovered above the neutral 50 level, indicating that buying pressure is building without yet reaching overbought conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) has crossed into positive territory, reflecting improving upside momentum and supporting the case for further gains after the recent breakout.

TRADE RECOMMENDATION

BUY EUR/GBP

ENTRY PRICE: 0.85315

STOP LOSS: 0.8450

TAKE PROFIT: 0.8620

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EUR/GBP Advances on Weak UK Inflation Data

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