The EUR to GBP (EURGBP) pair is little changed today as investors react to important economic data from the eurozone and the UK. The pair is trading at 0.8959, which is slightly higher than this month’s low of 0.8865 and high of 0.9020.
Eurozone inflation drops
The EURGBP pair reacted to the relatively weak inflation data from the eurozone. According to Eurostat, annual inflation in the European Union dropped to 0.1%, down from 0.3% in the previous month. The inflation rate was 1.2% in the same month a year ago.
According to Eurostat, the worst-performing countries in the region were Estonia, Luxembourg, and Cyprus, where consumer prices fell by 1.8%, 1.6%, and 1.4%. On the other hand, the strongest countries were in Poland, Czechia, and Hungary, where prices rose by 3.4%, 3.1%, and 2.2% respectively.
Meanwhile, the biggest contributors to higher prices was food, alcohol, and tobacco, whose prices rose by 0.64%. The price of services rose by 0.59% while that of non-energy industrial goods were barely moved.
On a positive sign, auto registrations showed some positive signs in May. For example, registrations declined by 50.3% in France after declining by 88% in the previous month. Similarly, the registrations increased by 39% in Germany after falling by 43.8% in April.
UK inflation eases ahead of BOE
Meanwhile, the EUR to GBP pair reacted to the weak CPI data from the UK. According to the Office of National Statistics (ONS), the headline CPI rose by just 0.5% in May after rising by 0.8% in the previous month. That was the worst performance since 2016. At the same time, the core CPI rose by 1.2% after rising by 1.4% in the previous month.
These numbers mean that the BOE will need to do something when it releases its rates decision tomorrow. There are analysts who predict that the bank will go nuclear and push rates negative. Others believe that while the bank may not lower rates, it could send a signal about the rate.
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EURGBP technical outlook
The EURGBP pair is trading at 0.8962, which is a few pips below the important resistance level of 0.9000. On the daily chart, the price is between the 50-day and 100-day exponential moving average. It is also above the 50-day and 100-day exponential moving average. Also, it is between the channel shown in black below. As such, the outlook of the EUR to GBP pair is neutral at this point. The key points to watch will be the support and resistance levels of 0.8860 and 0.9056 respectively.
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