The EURGBP pair, currently at 0.85860, is losing momentum after a slight recovery from its lowest point of the day. Despite bouncing back from a two-week high, it is still in a defensive position.

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• EUR/GBP fades bounce off intraday low but remains defensive after reversing from two-week high the previous day.

The pair currently trades last at 0.85860.

The previous day high was 0.8611 while the previous day low was 0.8584. The daily 38.2% Fib levels comes at 0.8594, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8601, expected to provide resistance.

EUR/GBP fades bounce off intraday low around 0.8580 as it justifies downbeat German Retail Sales amid the early hours of Thursday’s European session. In doing so, the cross-currency pair also takes clues from the upbeat British car production details while positioning for the Eurozone Consumer Price Index (CPI) for August and the European Central Bank’s (ECB) favorite inflation gauge for the said month, namely the Harmonized Index of Consumer Prices (HICP).

Germany’s Retail Sales for July reprints -0.8% MoM figures versus 0.3% market forecasts while the YoY outcomes appear more disappointing as it drops to -2.2% from -1.6%, compared to -1.0% expected.

On Tuesday, the first readings of Germany’s inflation per the Consumer Price Index (CPI) matched 0.3% market forecasts and prior on a MoM basis but edged lower to 6.1% YoY from 6.2% previous readings, compared to the analysts’ estimations of 6.0%. Further, the inflation conditions per the European Central Bank’s (ECB) favorite gauge, namely the Harmonized Index of Consumer Prices (HICP), eased to 0.4% MoM and 6.4% YoY versus 0.5% and 6.5% respective priors, compared to 0.3% MoM and 6.2% YoY market estimations.

Given the recently downbeat price pressure, the European Central Bank’s (ECB) hawkish bias appears to have fewer takers, which in turn prod the Euro buyers ahead of the key inflation data for the bloc.

On the other hand, the UK’s Society of Motor Manufacturers and Traders (SMMT) said earlier in the day that Britain’s car production rose for the sixth consecutive month in July with a 31.6% YoY growth. The SMMT cited the automakers’ recovery from global chip shortages as the key catalyst for the jump in car production figures amid looming recession woes. It should be noted that the UK’s car industry is a significant contributor to manufacturing production and exports. Previously, the UK’s Consumer Credit and Mortgage Approval eased for July and prod the British Pound (GBP) buyers.

Looking ahead, the EUR/GBP traders should pay close attention to the Eurozone inflation data for clear directions as ECB President Christine Lagarde shows readiness for further rate hikes to tame the price pressure if needed. Additionally, comments from the Bank of England (BoE) Chief Economic Huw Pill will also be important as the policymakers have recently been struggling to strike a balance between the higher inflation and softer economics from the UK.

EUR/GBP remains depressed within a 16-week-old bearish channel formation, currently between 0.8650 and 0.8490. That said, the momentum indicators suggest a gradual decline in the prices.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8586 at the time of writing. Pair opened at 0.8587 and is trading with a change of -0.01% % .

The pair is trading above its 20 Daily moving average @ 0.8585, below its 50 Daily moving average @ 0.8586 , below its 100 Daily moving average @ 0.8641 and below its 200 Daily moving average @ 0.8714

The previous day high was 0.8611 while the previous day low was 0.8584. The daily 38.2% Fib levels comes at 0.8594, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8601, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8577, 0.8568, 0.8551
• Pivot resistance is noted at 0.8604, 0.862, 0.863

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