The EUR/GBP is down for the past two straight days as traders reflect on the mixed economic numbers from the United Kingdom (UK) and the European Union (EU). The pair dropped to 0.8653, which is slightly below yesterday’s high of 0.8698.
What happened: The Office of National Statistics (ONS) published the latest GDP data from the UK. The numbers revealed that the economy rose by 0.4% in February after falling by 2.2% in the previous month. This led to a year-on-year contraction of 7.8%, which was lower than the expected decline of 7.3%. Other numbers were relatively positive. The manufacturing production rose by 1.3% on an MoM basis while industrial production rose by 1.0%. Construction output rose by 1.6%. Analysts believe that this recovery will continue as the UK economy reopens.
Meanwhile, in the European Union, data showed that retail sales rebounded in February. Today, the EUR/GBP reacted to the relatively strong German wholesale price index (WPI). The index rose from 1.4% in February to 1.7% in March. It rose by 4.4% on a year-on-year basis. In Italy, industrial production fell by 0.6% in February, a modest improvement from the previous decline of 2.1%.
EUR/GBP technical forecast
The EUR/GBP price has been in a relatively strong downward trend lately. It has fallen from 0.9230 in December last year to a low of 0.8470. Recently, it has attempted to rebound and risen to 0.8697.
The 25-day and 15-day moving averages are also making a bullish crossover pattern at the 23.6% Fibonacci retracement level. The pair also seems to be forming a bullish pennant pattern.
Therefore, in the near term, the pair may rebound as bulls target the 38.2% retracement level at 0.8766. However, a drop below the support at 0.8600 will invalidate this trend.