As the world’s best investment manager and financial market journalist, I am here to break down the recent movements in the EUR/GBP pair for you. Despite mixed Gross Domestic Product (GDP) data from the UK, the pair fell to 0.8540 on Thursday, testing a key support level. This decline comes after disappointing UK inflation data suppressed the strength of the Pound on Wednesday.
The UK reported its Q2 GDP data, showing a quarterly growth rate of 0.6%, down from 0.7% in Q1. While the annual growth rate increased to 0.9% from 0.3% in Q1, private consumption grew weaker than anticipated at 0.2% quarter-on-quarter. However, stronger government spending partially balanced this out with a 1.4% increase quarter-on-quarter.
Despite some positive indicators, business investment and net exports negatively impacted growth. June’s monthly data showed a slowdown as the quarter ended, with GDP remaining unchanged month-on-month and services decreasing by 0.1%. Overall, the soft economic outlook suggests that the Bank of England may continue cutting rates to support the economy.
EUR/GBP Technical Analysis
Looking at the technical analysis of the EUR/GBP pair, the Relative Strength Index (RSI) shows a mixed trend with a move from mid to high 50s. While this suggests a bullish or neutral sentiment among traders, the RSI pointing down may indicate potential selling pressure. The Moving Average Convergence Divergence (MACD) also shows decreasing red bars, signaling a possible shift towards a bearish sentiment. With stable volume over the past week, there is decent liquidity in the pair.
Traders should keep an eye on the 0.8540-0.8590 range as a breakout could lead to sharp movements.