- The EUR/GBP is currently trading at 0.8560, revealing a mild daily gain in Friday’s session.
- The HICP from the EU grew at a higher pace than expected in February,
- Focus now turns to the ECB decision next week, with a hold already priced in.
The EUR/GBP currency pair is presently trading at approximately 0.8560, marking marginal gains subsequent to the release of the Harmonized Index of Consumer Prices (HICP) report from the Eurozone in February, surpassing initial expectations. Attention is now turning towards the upcoming European Central Bank (ECB) meeting.
In February, Eurozone inflation data slightly exceeded projections, with the headline rate increasing by 2.6% year-over-year, surpassing the anticipated 2.5% and showing a slight decrease from January’s 2.8%. Core inflation also outperformed forecasts, reaching 3.1% year-over-year compared to the expected 2.9%, albeit lower than January’s 3.3%. These figures suggest a gradual decline in inflation, albeit not following a linear pattern.
Looking ahead to the ECB meetings, market sentiment indicates a potential easing cycle starting in June, with the current week expected to see a status quo, and the likelihood of a cut in April remaining relatively low at around 25%. Conversely, for the Bank of England, market participants are postponing the first anticipated cut to August, providing a marginal advantage to the Pound.
EUR/GBP technical analysis
In recent trading sessions, the Relative Strength Index (RSI) has hovered around the neutral zone, indicating a delicate equilibrium between buyers and sellers. The modest uptick observed over the past few days hints at a budding positive momentum for EUR/GBP. However, the market seems reluctant to commit to a definitive direction.
The Moving Average Convergence Divergence (MACD) histogram, characterized by its stagnant green bars, reflects a temporary halt in the pair’s bullish momentum, suggesting a state of indecision among market participants. The prevailing low volatility further underscores the market’s hesitancy in choosing a clear path.
Despite the pair maintaining its position above the 20-day Simple Moving Averages (SMAs), it remains below the 100 and 200-day SMAs. This juxtaposition indicates a prevailing bearish influence on the broader time frame, while shorter-term dynamics seem to be under the control of the bulls.
