- The EUR/GBP is trading at 0.8550, after peaking at a high of 0.8570.
- The Core HICP in Germany grew at a slower pace than expected in February.
- Soft inflation figures fuel the hopes of sooner cuts by the ECB.
The EUR/GBP pair experienced a modest uptick during Thursday’s trading session but relinquished its gains, reaching a peak at 0.8570. This occurred in the aftermath of subdued inflation figures derived from Germany’s Harmonized Index of Consumer Prices (HICP), sparking speculations of an accelerated policy shift by the European Central Bank (ECB).
The preliminary HICP data for February unveiled a persistent yet decelerated year-on-year inflation rate of 2.7%, aligning with predictions but notably down from January’s 3.1%. The monthly inflation rate met expectations at 0.6%, marking a recovery from January’s 0.2% decline. Of particular interest to the ECB, core inflation edged up by 2.5%, slightly below the anticipated 2.6% and a drop from the preceding 2.9%. This deceleration in core inflation growth raises the prospect of early policy adjustments by the ECB. President Christine Lagarde hinted at potential rate cuts in the upcoming summer, with the European bank anticipated to implement over 100 basis points of easing in 2024.
EUR/GBP technical analysis
In assessing the Relative Strength Index (RSI) for the EUR/GBP pair, it is observed that the index maintains a positive stance, affirming the prevailing influence of buyers in the current market scenario. However, its relatively flat trajectory implies a state of equilibrium, signifying a lack of significant advancement by either buyers or sellers.
Turning attention to the Moving Average Convergence Divergence (MACD) histogram, a discernible downtrend is evident, marked by a series of diminishing green bars. This trend signals a gathering negative momentum. The collective indications point to a struggle for buyers to sustain their momentum. Nevertheless, should they manage to stay above the 20-day Simple Moving Average (SMA), the short-term outlook may retain a somewhat optimistic tone.
