As the EUR/GBP pair marginally fell to 0.8530, extending a two-day losing streak, investors are analyzing the implications of the latest UK retail sales data. Despite the release of steady UK retail sales figures during the European session, the cross declined, pointing towards potential rate cuts by the Bank of England.
In July, UK retail sales showed signs of recovery, with total retail sales volume increasing by 0.5% month-on-month. This improvement, although slightly below expectations, marks a turnaround from the revised decline of 0.9% in June. On a year-on-year basis, retail sales grew by 1.4%, in line with expectations and a notable increase from the revised -0.3% in June.
While the recent sales data aligns with positive signals from the British Retail Consortium’s same-store sales for July, indicating a strong start to the third quarter, concerns about overall economic weakness persist. Despite robust Q2 GDP figures, the slowdown observed in June may prompt the Bank of England to consider further rate cuts to stimulate economic growth.
EUR/GBP Technical Analysis
Technical analysis of the EUR/GBP pair reveals a struggle between the 200-day and 100-day Simple Moving Averages (SMAs) at 0.8550 and 0.8510, respectively. While recent volume figures suggest diminishing selling pressure, the breach of the 200-day SMA on Thursday signals a bearish outlook for the pair.
The Relative Strength Index (RSI) of the pair hovers around the mid-50s, indicating a balance in market sentiment with a slight downward trend. The Moving Average Convergence Divergence (MACD) indicator shows decreasing green bars, hinting at potential downward momentum in future trading sessions.
EUR/GBP Daily Chart
Overall, the EUR/GBP pair’s decline to 0.8530 reflects investor concerns about the UK retail sales data and its impact on future monetary policy decisions. Traders should monitor key technical levels and indicators to gauge the pair’s direction in the coming days.