EURGBP is trading slightly lower in today’s Asian session by almost 0.10% at 0.8686. What is interesting, however, is that the currency pair is retesting its month-to-date lows. With the German CPI due today, will there be enough buyers to push EURGBP higher?
Scheduled at 12:00 pm GMT, Germany’s preliminary CPI data is eyed to come in flat at 0.0%. This forecast factors in the slowdown in economic activity brought about by lockdowns across the country. Something to keep in mind with this report is that inflation in other countries, specifically Australia and New Zealand, have topped expectations despite the pandemic. Should Germany’s inflation data also beat consensus, we could see EURGBP trade higher. On the other hand, a disappointing report could be bearish for EURGBP. This is because it could fuel speculations that the ECB would have one more reason to take rates deeper into negative territory.
On the 4-hour time frame, it can be seen that EURGBP has found its way to its previous lows around 0.8688. A closer look at the recent price action of the currency pair would also show that it has been consolidating with a downward slope. Consequently, EURGBP has formed a falling wedge chart pattern. This is considered as a bullish reversal pattern. And so, a break above the consolidation above the highs of April 27 at 0.8736 could mean that EURGBP is headed higher.
On the contrary, a close below the lows of April 14 at 0.8680 would invalidate the chart pattern. Instead of buyers, this would indicate that sellers are in control. Should this happen, the next support level on EURGBP would be at 0.8592 where it topped in January 14.