- The EUR/GBP currency pair continues to decline as a result of the UK inflation figures surpassing expectations.
- The Eurozone‘s moderate GDP numbers have failed to alleviate the Euro’s weakness.
- Traders are eagerly anticipating the UK Retail Sales data, as it may provide valuable insights into the Bank of England‘s upcoming interest rate decision.
EUR/GBP continues to experience losses, trading near the monthly low at 0.8540 during the Asian session on Thursday. The EUR/GBP downward trajectory is further driven by better-than-expected inflation figures from the United Kingdom (UK) on Wednesday.
📊 EURGBP : Il est arrivé sur un beau support qu’il rejette en M30.
Il y a eu une cassure de TD en H4 avec 2 PB en M30
On voit qu’il est dans une belle zone de survente en H4 (zone des 25 du RSI).
On aperçoit également une divergence haussière en M30.📈 #achat#trading #forex pic.twitter.com/tPzuDoALGL
— lag (@tradelag) August 17, 2023
The latest economic indicators in the UK have heightened concerns about the possibility of the Bank of England (BoE) implementing additional interest rate hikes in its September meeting. Notably, the July UK Consumer Price Index (CPI) showed a monthly decrease of 0.4%, which was slightly below the projected decline of 0.5% and followed a 0.1% increase in June. On an annual basis, the CPI came in at 6.8%, in line with expectations and representing a slight decrease from the previous reading of 7.9%.
Furthermore, the Core CPI, which excludes volatile items, remained steady at 6.9%, broadly aligning with the anticipated rate of 6.8%. These figures suggest that while inflation in the UK remains elevated, there has been a marginal moderation compared to previous periods. The outcome of these inflation numbers is likely to influence the BoE’s decision on future interest rate adjustments.
— Estates IT® (@EstatesIT) August 17, 2023
The Eurozone released moderate economic data on Wednesday. GDP growth remained steady at 0.3% on a quarterly basis and 0.6% on an annual basis. Employment increased by 0.2% on a quarterly basis in Q2. However, the data did not help the Euro strengthen against the Pound Sterling.
While checking the prices of items we consume frequently might seem like an easy way to gauge inflation, a central bank needs a broader measure of how prices are changing across the entire country.
— MAS (@MAS_sg) August 17, 2023
Traders will closely monitor upcoming data releases, such as the Eurozone Trade Balance and Harmonized Index of Consumer Prices (HICP). Additionally, a speech by the European Central Bank’s Chief Economist and UK Retail Sales data are scheduled. These events will provide insights into the economies and could impact trading decisions for the EUR/GBP pair.