• UK average earnings growth meets expectations and prompts some selling.
• Downside remains cushioned following the release of EZ Q1 GDP print.
The EUR/GBP cross surrendered early gains to an intraday high level of 0.8818 and slipped back to the lower end of its daily trading range.
The cross quickly retreated over 20-pips from session tops following the release of mostly in-line UK average weekly earnings data, coming in to show y-o-y growth of 2.9% excluding bonuses and 2.6% including bonuses.
Except for the knee-jerk reaction, the cross lacked any follow-through selling pressure and found some support from better-than-expected EZ macro releases, showing that the economic growth stood at 0.4% during the first quarter of 2018.
Meanwhile, the composite EZ industrial production figures fell short of consensus estimates but were still better than a contraction seen in the previous month and partly offset mixed German ZEW economic survey.
The cross is now trying to stabilize near the 0.8800 handle as investors now look forward to the BoE’s inflation report hearings for fresh clues over the central bank’s near-term monetary policy outlook, which might eventually provide some meaningful impetus.
Technical levels to watch
A follow-through selling below 0.8780 level has the potential to continue dragging the cross further towards 0.8745 horizontal level en-route the 0.8720-15 support. On the upside, the 0.8815-20 region might continue to act as an immediate hurdle and is closely followed by resistance near the 0.8840 supply zone.