Key Highlights
- The Euro traded above the 0.9000 level recently before correcting lower against the British Pound.
- There is a crucial ascending channel in place with support at 0.8900 on the daily chart of GBP/USD.
- The Euro Area Gross Domestic Product for Q2 2018 (Prelim) posted a rise of 0.4% (QoQ), more than the forecast of 0.3%.
- Today, the UK Consumer Price Index for July 2018 will be released, which is forecasted to rise 2.5%.
EURGBP Technical Analysis
The Euro climbed higher this past week and broke the 0.8950 resistance against the British Pound. The EUR/GBP pair even broke the 0.9000 level before finding sellers near the 0.9030 level.
Looking at the daily chart, the pair formed a short-term top near the 0.9030 level and started a downside move. It dropped below the 0.8950 support and the 50% Fib retracement level of the last wave from the 0.8854 low to 0.9030 high.
However, the pair remains well supported above the 0.8880-0.8900 zone. More importantly, there is a crucial ascending channel in place with support at 0.8900 on the same chart.
The pair is also trading well above the 0.8800 pivot level and the 100-day simple moving average (red). Therefore, as long as the pair is above the 0.8880 support zone, it could resume its upside below.
On the other hand, a break below the ascending channel and the 0.8880 support could drift the pair towards the 0.8800-0.8810 support zone.
On the upside, an initial resistance is near the 0.8960 level, above which, the price could revisit the 0.9000 resistance area.
Recently, the Euro Area Gross Domestic Product reading for Q2 2018 (Prelim) was released by the Eurostat. The market was looking for a 0.3% growth in the GDP in Q2 2018 compared with the previous quarter.
However, the result was better as the Euro Area’s seasonally adjusted GDP rose by 0.4%. The yearly change was +2.2%, more than the forecast of 2.1%.
The result was positive, but it failed to help the EUR/USD pair as it stayed below the 1.1420-1.1430 resistance. Moreover, the GBP/USD pair struggled to break the 1.2820 resistance and remained in a bearish zone.
Economic Releases to Watch Today
- US Retail Sales July 2018 (MoM) – Forecast +0.1%, versus +0.5% previous.
- US Industrial Production July 2018 (MoM) – Forecast +0.3%, versus +0.6% previous.
- US Capacity Utilization July 2018 – Forecast 78.2%, versus 78.0% previous.
- UK Consumer Price Index July 2018 (YoY) – Forecast +2.5%, versus +2.4% previous.
- UK Core Consumer Price Index July 2018 (YoY) – Forecast +1.9%, versus +1.9% previous.
