Key Highlights

  • The Euro declined sharply versus the US Dollar, but held gains against the British Pound.
  • There is a crucial contracting triangle forming with resistance at 0.8810 on the 4-hours chart of EUR/GBP.
  • UK’s Consumer Price Index in April 2018 increased 0.4% (MoM), less than the forecast of +0.5%.
  • Today in the UK, the Retail Sales report for Feb 2018 will be released, which is forecasted to increase 0.7% (MoM).

EURGBP Technical Analysis

The Euro found support around the 0.8700 level against the British Pound and recovered. The EUR/GBP pair is currently placed nicely above 0.8740 and is preparing for the next move.

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Looking at the 4-hours chart, the pair bounced from the 0.8712 low and moved above the 38.2% Fib retracement level of the last decline from the 0.8836 high to 0.8712 low.

At the moment, it seems like the pair is well supported above the 0.8740 level and is forming a crucial contracting triangle with resistance at 0.8810 on the 4-hours chart.

The triangle resistance is close to the 76.4% Fib retracement level of the last decline from the 0.8836 high to 0.8712 low. Therefore, a break and close above 0.8800-0.8810 could open the doors for more gains in EUR/GBP.

On the other hand, if the pair breaks down below 0.8740 and 0.8720, it may perhaps retest the 0.8680 support area. Looking at the other major pairs, EUR/USD remained in a bearish zone below 1.1800, and GBP/USD declined sharply below 1.3400.

Recently in the UK, the Consumer Price Index for April 2018 was released by the National Statistics. The market was looking for a rise of 0.5% in the CPI in April 2018 compared with the previous month.

However, the actual result was a bit lower as the CPI increased 0.4%. In terms of the yearly change, there was a rise of 2.1%, less than the forecast of +2.2% and also less than the last +2.3%. The report added:

The largest downward contribution to the change in the rate came from air fares, which were influenced by the timing of Easter. Rising prices for motor fuels produced the largest, partially offsetting, upward effect. The Consumer Prices Index (CPI) 12-month rate was 2.4% in April 2018, down from 2.5% in March 2018.

The overall result failed to help the British Pound and it seems like it may continue to decline in the near term.

Economic Releases to Watch Today

  • Germany’s GfK Consumer Confidence for June 2018 – Forecast 10.8, versus 10.8 previous.
  • German Gross Domestic Product for Q1 2018 (YoY) – Forecast 1.6%, versus 1.6% previous.
  • German Gross Domestic Product for Q1 2018 (QoQ) – Forecast 0.3%, versus 0.3% previous.
  • UK Retail Sales for Feb 2018 (YoY) – Forecast +0.1%, versus +1.1% previous.
  • UK Retail Sales for Feb 2018 (MoM) – Forecast +0.7%, versus -1.2% previous.
  • UK Retail Sales ex-fuel for Feb 2018 (YoY) – Forecast +0.1% versus +1.1% previous.
  • US Initial Jobless Claims – Forecast 220K, versus 222K previous.
  • US Existing Home Sales for March 2018 (MoM) – Forecast -0.2%, versus +1.1% previous.

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