EUR/GBP Price Forecast: Refreshes two-month high near 0.8575

• EUR/GBP refreshes two-month high near 0.8575 after the release of the preliminary UK/Eurozone PMI data for June.
• The Eurozone Composite PMI rose steadily, while the UK overall PMI data beat estimates.
• Investors await ECB Lagarde’s speech for fresh cues on the monetary policy outlook.

The EUR/GBP pair posts a fresh two-month high near 0.8575 during European trading hours on Monday. The cross trades broadly stable after the release of the preliminary United Kingdom (UK)/Eurozone Purchasing Managers’ Index (PMI data for June.

Flash Hamburg Commercial Bank (HCOB) Eurozone PMI report showed that the overall business activity grew at a steady pace, but missed estimates. Activities in the services sector increased to the expansion boundary after contracting in April. The Services PMI came in at 50.0, as expected, against 49.7 in May. A figure above the 50.0 threshold is considered expansion in business activities. Meanwhile, the Manufacturing PMI contracted at a steady pace to 49.4.

Meanwhile, investors await the speech from European Central Bank (ECB) President Christine Lagarde before the parliament at 13:00 GMT. Lagarde is expected to provide cues about the likely monetary policy outlook for the remainder of the year.

In the UK region, flash S&P Global PMI data for June came in better than projected. The Composite PMI rose to 50.7, higher than expectations of 50.5 and the prior release of 50.3. Activities in the manufacturing sector declined at a moderate pace, and the service sector activity expanded at a faster pace, as expected.

EUR/GBP extends its almost a month-old reversal move above the 50% Fibonacci retracement around 0.8540, which is plotted from the 11 April high of 0.8739 to the May 29 low of 0.8356. Upward-sloping 20-day Exponential Moving Average (EMA) around 0.8500 suggests that the near-term trend is bullish.

The 14-day Relative Strength Index (RSI) holds above 60.00, suggesting that the bullish momentum is intact.

Looking up, the pair could advance to near the April 21 high of 0.8624 and the 78.6% Fibo retracement of 0.8655 if it breaks above the 61.8% Fibo retracement around 0.8590.

On the flip side, a downside move by the pair below the June 2 high of 0.8450 could expose it towards the June 4 high of 0.8407, followed by the May 29 low of 0.8356.

EUR/GBP daily chart

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