EUR/GBP retreats as chances of BoE's June cut plunge after UK's CPI

Source Fxstreet
May 22, 2024 14:40
  • EUR/GBP slides to 0.8505, posting 0.37% losses as sterling strengthens during Wednesday's trading period.
  • Following the UK's CPI, markets foresee diminishing odds for a BoE rate cut in June, bolstering the pound vs the euro.
  • The ECB is still considering a potential policy rate cut in June and divergences may favor the Pound.

The EUR/GBP traded lower falling to 0.8505 on Wednesday after the Pound garnered strength following the Office for National Statistics (ONS) releasing inflation data higher than the market's expectations. This pushed down the odds of a June rate cut by the Bank of England (BoE), giving a boost to the sterling.

The Office for National Statistics (ONS) of the UK revealed that in April, the inflation rate dipped to 2.3% year-on-year from 3.2% in March, surpassing market expectations of 2.1%, while the core CPI, excluding volatile food and energy prices, rose to 3.9% against an expected 3.6%. As a reaction, forecasts for a Bank of England (BoE) rate cut in June declined sharply from 50% to 12% following the inflation announcement, and those hawkish bets seem to have benefited the Pound.

On the other hand, the European Central Bank (ECB) officials are confident that inflation is under control and are gearing up for a first cut in June. In that sense, in case the BoE and ECB diverge with the British bank delaying cuts, could lay the ground for further downside .

EUR/GBP technical analysis

Examining the daily chart, the Relative Strength Index (RSI) indicates a negative trend, with its most recent value edging towards the oversold territory. Further supporting this bearish outlook is the Moving Average Convergence Divergence (MACD) as it illustrates rising red bars, revealing a rising negative momentum.

 

EUR/GBP daily chart

Looking at the broader market perspective, the EUR/GBP finds itself in a challenging position in relation to its Simple Moving Averages (SMA), hinting towards a potential further decline. Currently, the alignment is below the 20, 100, and 200-day SMAs. This traditionally suggests a bearish tilt, which is further reinforced by Wednesday’s downward movement.

 

EUR/GBP

Overview
Today last price 0.851
Today Daily Change -0.0030
Today Daily Change % -0.35
Today daily open 0.854
 
Trends
Daily SMA20 0.8572
Daily SMA50 0.8567
Daily SMA100 0.8563
Daily SMA200 0.8603
 
Levels
Previous Daily High 0.8551
Previous Daily Low 0.8534
Previous Weekly High 0.8614
Previous Weekly Low 0.8555
Previous Monthly High 0.8645
Previous Monthly Low 0.8521
Daily Fibonacci 38.2% 0.854
Daily Fibonacci 61.8% 0.8545
Daily Pivot Point S1 0.8532
Daily Pivot Point S2 0.8524
Daily Pivot Point S3 0.8515
Daily Pivot Point R1 0.855
Daily Pivot Point R2 0.8559
Daily Pivot Point R3 0.8567

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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