The EURGBP currency pair experienced a rollercoaster ride this week, with a flurry of data releases dictating its trajectory. In the Eurozone, inflation figures remained in line with expectations, with a slight dip in the year-over-year rate to 2.8% and core inflation easing to 3.3%. Despite this, the HCOB Services PMI pleasantly surprised, surpassing forecasts by rising to 50 from the previous 48.4. However, manufacturing PMI fell short of expectations, coming in at 46.1 compared to the anticipated 47.
Meanwhile, the UK also presented a mixed picture, with the Services PMI holding steady at 54.3 against expectations of a slight decline. At the same time, the manufacturing PMI dipped below consensus to 47.1 from the anticipated 47.5. These conflicting data releases contributed to choppy price movements for the currency pair throughout the week, culminating in a tentative outlook as it approaches the week’s close.
Technical
On the daily chart, the price action broke through the downtrend but failed to gain traction, with the 25-SMA (green line) underpinning the price despite trading below the 50-SMA (blue line) and 100-SMA (orange line), reflecting ongoing bearish momentum.
If the support at the 25-SMA holds in the upcoming session, the resistance at 0.8548 could be vulnerable to a breakout to the upside. If this level gets cleared, the resistance at 0.8569 could be in the mix, a psychological resistance level that previously triggered a pullback. Movement above this threshold could send the price to the 50-SMA resistance close to 0.8584.
On the contrary, if the 25-SMA support fails to hold, an additional leg down could drive the price back within the psychological demand zone at 0.8519. This level could be crucial in determining the future price trajectory, and if it fails to provide buyers for a retracement, the currency pair could stumble toward 0.8501 and 0.8479.
Summary
Various mixed economic data releases from both economies created a choppy week for the EURGBP currency pair. As things stand, the 25-SMA support underpins the price and could prevent additional downside as the week draws to a close.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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