The EUR/GBP pair declined to 0.8540, breaking below the 200-day Simple Moving Average (SMA) as UK employment data provided support to the Pound Sterling. Meanwhile, sentiment data weighed on the Euro during the European session.
On Tuesday, the UK released mixed labor market data for the three months ending in June. Average weekly earnings saw a YoY increase of 5.4% excluding bonuses, in line with expectations and slightly above the Bank of England’s Q2 projection. However, total earnings growth, including bonuses, slowed to 4.5% YoY, indicating a deceleration. Despite this, the unemployment rate unexpectedly dropped to 4.2%, the lowest since February.
In contrast, Germany’s August ZEW survey revealed significant economic weakness, with expectations and current assessment both deteriorating. This suggests ongoing economic challenges in the eurozone, potentially leading to further easing measures by the European Central Bank.
Technical Analysis and Outlook
The EUR/GBP’s Relative Strength Index (RSI) is moving away from overbought levels, while the Moving Average Convergence Divergence (MACD) indicator shows a shift towards a bearish outlook. With the 200-day SMA now acting as resistance at 0.8575, the next target for sellers is the 0.8530-0.8500 zone.
EUR/GBP Daily Chart Analysis
Analysis:
The decline in the EUR/GBP pair below the 200-day SMA signals a shift in market sentiment, with the Pound Sterling gaining strength on positive UK employment data. This move comes amid ongoing economic challenges in the eurozone, as reflected in Germany’s ZEW survey. Traders should watch for further downside potential towards the 0.8530-0.8500 support zone, with a bearish outlook supported by technical indicators.