The Eur to Gbp exchange rate was up 0.4% in the European trading session with the U.K. closed for a bank holiday. The Euro is moving higher despite a small downward revision to Italian GDP.
The market was expecting a figure of -17.3% year-on-year, but the actual result was -17.7%. The number was not too far from expectations and investors appear to be ignoring GDP numbers with every major economy seeing drastically lower figures for the second quarter. Traders are looking to other data points in order to predict which economies will bounce back more quickly.
European CPI Data
Tomorrow sees the release of the European Consumer Price Index for August and this will be a bigger driver of the Eur to Gbp pair. The market is expecting a number of 0.9% year-on-year, which is a drop on last month’s 1.2% figure. If the number undershoots predictions then the pound is likely to advance. A higher number will see support for the Euro and the inflation data could settle the argument at this key support level.
Traders are on guard for any sign of deflation that could see renewed calls in the European or U.K. economy for negative interest rates. The U.K. rate is currently 0.1% with most of Europe at the zero bound. Brexit talks are still in the background of the EURGBP outlook and a French Foreign Minister has today blamed a lack of progress on the U.K.’s, “Intransigent And Unrealistic Attitude,” which highlights that talks are still showing some animosity between the two sides.
EURGBP Technical Outlook
The EURGBP exchange rate was seeking to shake off last week’s bearish close and get back above the key support around 0.8950. This level would open up a climb higher to 0.9000 and above, but the bulls and bears are locked in a battle at the moment. If the bullish start to the week doesn’t hold then the pair can retest the 0.8860 level on the downside.
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EURGBP Daily Chart
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