“¢ EZ consumer inflation figures come in better than market expectations.
“¢ Positive CPI print offset by slightly weaker GDP growth figures.
“¢ Investors also seemed to hold back from placing fresh bets ahead of BoE.
The EUR/GBP cross struggled to build on early up-move to over one-week tops, albeit has managed to hold above the 0.8900 handle post-Euro-zone economic data.
According to the flash estimates, the Euro-zone headline CPI is seen rising by 2.1% y/y in July and core CPI is also seen edging higher to 1.1% y/y in the reported month. The inflation figures turned out to be hotter than market expectations and provided a minor lift to the shared currency.
The positive effect, however, was largely negated by a slight disappointment from the prelim GDP print, coming in to show 0.3% q/q growth during the second quarter of 2018. The yearly growth rate also slowed to 2.1%, from 2.5% previous, and did little to provide any additional boost.
Moreover, investors also seemed reluctant to place any aggressive bets ahead of this week’s key event risk – the highly anticipated BoE monetary policy decision on Thursday. This coupled with influential UK economic data, scheduled at the start of a new month, might further contribute towards infusing some unusual volatility around the GBP crosses.
Technical levels to watch
Weakness below the 0.8900 handle is likely to find support near the 0.8880-75 horizontal zone, below which the pair is likely to accelerate the slide towards 0.8840-35 support area. On the upside, momentum beyond the 0.8925-30 region could lift the cross back towards 0.8955-60 supply zone before bulls attempt a move towards reclaiming the key 0.90 psychological mark.
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