The EUR/GBP pair has discovered a temporary support near 0.8550 during Monday’s European session after a correction from a three-month high of 0.8625. Investors are closely monitoring the upcoming United Kingdom Employment data and consumer inflation data releases, scheduled for Tuesday and Wednesday.
The UK’s Average Earnings Excluding Bonuses are anticipated to decrease to 4.6% from the previous release of 5.7%, signaling a potential impact on the Pound Sterling’s strength. The market will be looking for clues on whether the Bank of England (BoE) will implement further rate cuts in September, based on the economic data outcomes.
On the other hand, the Euro’s next move will be influenced by speculation surrounding potential European Central Bank (ECB) rate cuts. ECB President Christine Lagarde’s recent announcement of a steady interest rate decision has left the door open for adjustments at the upcoming September meeting.
EUR/GBP is showing signs of a Falling Wedge breakout on the daily chart, indicating a possible bullish reversal. The 200-day Exponential Moving Average (EMA) near 0.8540 is acting as a crucial support level for Euro bulls. Additionally, the Relative Strength Index (RSI) has entered a range that could trigger a bullish momentum if sustained above 60.00.
If the asset surpasses the August 8 high at 0.8625, it could target the January 2 high at 0.8683 and the December 28, 2023 high at 0.8615. Conversely, a downside move below the psychological support of 0.8500 may lead to a test of the August 2 low at 0.8466 and the round-level support of 0.8400.
Economic Indicator: Average Earnings Excluding Bonus (3Mo/Yr)
The Average Earnings Excluding Bonus release is a crucial indicator of pay level changes in the UK economy, released by the UK Office of National Statistics. A positive result is considered bullish for the Pound Sterling (GBP), while a lower reading is viewed as bearish.
Analysis:
The EUR/GBP pair is currently at a critical juncture, with upcoming UK data releases and ECB speculation impacting its trajectory. Traders should closely monitor the Average Earnings Excluding Bonuses data for insights into the UK economy’s health and the potential impact on the Pound Sterling. Additionally, the technical breakout pattern on the EUR/GBP chart suggests a bullish reversal, but a failure to maintain key support levels could signal a bearish turn. Overall, staying informed and adaptable to market developments is crucial for navigating the EUR/GBP pair’s fluctuations effectively.