The pair EURGBP reached just below the 0.8600 threshold following an optimistic report on the Retail Sales figures in the UK.

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• EUR/GBP has tested territory marginally below 0.8600 on upbeat UK Retail Sales data.

The pair currently trades last at 0.85939.

The previous day high was 0.8636 while the previous day low was 0.8574. The daily 38.2% Fib levels comes at 0.8598, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8612, expected to provide resistance.

The EUR/GBP pair is looking to deliver a break below the crucial support of 0.8600 as the United Kingdom Office for National Statistics has reported upbeat Retail Sales (May) data. Monthly economic data has expanded by 0.3% while the street was anticipating a contraction by 0.2%. The pace of expansion remained lower than the prior speed of 0.5%.

Annualized Retail Sales contracted by 2.1% but remained better as investors were hoping for a contraction of 2.6%. It looks like higher payouts offered by firms to offset labor supply shortages have equipped households with higher liquidity for disposal. Solid retail demand would fuel inflationary pressures and might force the Bank of England (BoE) to further policy tightening.

On Thursday, the Bank of England (BoE) hikes interest rates unexpectedly by 50 basis points (bps) to 5% while the street was anticipating an increase of 25 bps. No doubt, the risk of a fat rate hike by the BoE was sufficient as inflationary pressures for May in the UK turned out extremely persistent.

May’s inflation data remained hotter than expected as labor market conditions were tightened further and food price inflation is not peaked yet. Meanwhile, UK’s core inflation has printed a fresh new high of 7.1%, which has tilted expectations of market participants in favor of a fat interest rate hike from the central bank.

Also, in Eurozone, the European Central Bank (ECB) is worried about the persistence of core inflation. Adding to that, headline inflation is thrice the required rate of 2%, which is keeping chances of more rate hikes in July alive. However, uncertainty is stemming from the September meeting. ECB policymaker Peter Kazimir said on Wednesday that he is not certain whether the central bank will continue its rate hike cycle in September. He further added we would need to have core inflation under control to stop tightening.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.86 at the time of writing. Pair opened at 0.8594 and is trading with a change of 0.07 % .

The pair is trading above its 20 Daily moving average @ 0.8592, below its 50 Daily moving average @ 0.8691 , below its 100 Daily moving average @ 0.8759 and below its 200 Daily moving average @ 0.8751

The previous day high was 0.8636 while the previous day low was 0.8574. The daily 38.2% Fib levels comes at 0.8598, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8612, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8567, 0.8539, 0.8504
• Pivot resistance is noted at 0.8629, 0.8664, 0.8692

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