EURGBP tested the 0.90 mark for the second time the last five trading sessions and managed to rebound. Investors focus has shifted to the new round of negotiations between the EU and UK, which started in Brussels yesterday.
The agenda includes issues on rules on investment transport, fishing rights and police co-operation. They will also discuss the rules on competition and state support for companies after the Brexit.
EU and the United Kingdom want to reach a deal before the negotiations are scheduled to end on October 2. But time is running out as EU bureaucracy needs at least 11 weeks to approve any agreement, making the October 15 European summit of leaders the effective deadline.
Earlier today the UK Consumer Price Index came in at 1% beating the forecast of 0.6%. Inflation increased in the UK, because of higher prices in shoes and clothes. Personal protective equipment and higher oil prices also contributed to the sharp rise in inflation. Core Consumer Price Index registered in at 1.8%, above the expectations of 1.3%. The Retail Price Index registered in at 0.5% beating the expectations of 0.1% in July.
From European Monetary Union the Consumer Price Index (CPI) came in at -0.4% below the forecast of -0.3% in July, but the annualize CPI came at 0.4% in line with expectations.
EURGBP Price Analysis
EURGBP is 0.21% higher at 0.9031 and attempts to return above the 50-day moving average as the pair is looking for direction from the new round of Brexit negotiations.
The recent consolidation around the 50-day moving average would end on a credible break above or below.
For now, resistance for the pair is at 0.9043 the daily high. While more selling pressure would emerge at 0.9060 the top from yesterday’s trading session. In case of a break higher then the next hurdle is at 0.9077 the high from July 30.
On the other hand, support for the pair stands at 0.90 round figure. If the bears break that point, then the next support is at 0.8982 the low from August 11. The next critical support is at 0.8928 the 100-day moving average.