MAs Keeping EUR/GBP In Range After the Eurozone CPI Inflation

The EUR/GBP rate has been trading within a narrow range between 0.65 and 0.66 since the beginning of the year, but it’s signaling a bullish break. This tight trading range suggests a period of consolidation or indecision in the market, but recently, there have been attempts by buyers to push the exchange rate above the range, with buying interest observed near the upper boundary of the range.

We have seen buyers push above 0.86 twice in the last two months, however, despite these attempts, moving averages have acted as resistance, rejecting the price on both occasions. This suggests that there is significant selling pressure or lack of conviction among buyers to push the exchange rate beyond the range. As a result, EUR/GBP has retreated back within the range, indicating that the consolidation phase continues and that neither buyers nor sellers have gained a decisive advantage in the market.

EUR/GBP Chart Daily – Back in the Range

On the EUR/GBP daily chart, the 100-day Simple Moving Average (SMA) was acting as support until the middle of April, but it was broken and and the 200-day SMA turned into resistance after the surge to 0.8645, which is denoted by the purple line and currently positioned at 0.8640.

The price action reversed around these technical levels , suggesting that there are identifiable risks associated with these dual levels. This month, the reversal came lower, after buyers failed to break the 100 smooth moving average (red).However, the Euro doesn’t have much reason to rally against the GBP since the Eurozone economy is still pretty weak and inflation is lower than in the UK, as today’s final Eurozone CPI inflation showed.

Eurozone Final April CPI Inflation Report

• Industrial Output (YoY):
  • April: Industrial output increased by 6.7% compared to the same period last year, surpassing expectations of a 5.5% growth rate. This marks a significant acceleration from the 4.5% growth recorded in March.
• Retail Sales:
  • April: Retail sales saw a growth of 2.3% compared to the same period last year, falling short of expectations for a 3.8% increase. This is a slight decrease from the 3.1% growth recorded in March.
• Fixed Asset Investment (YTD/Y):
  • April: Fixed asset investment for the year-to-date (YTD/Y) grew by 4.2%, missing expectations for a 4.6% growth rate. This is a slight decrease from the 4.5% growth recorded in March.

EUR/GBP Live Chart