Chart - Courtesy Trading View
EUR/GBP was trading 0.19% lower on the day at 0.8839 at around 10:50 GMT, extends weakness for the fifth straight session.
The single currency is under pressure after Germany’s Harmonized Index of Consumer Prices (HICP) has shown a surprise decline amid falling energy prices.
Risk-off mood amid rising worries about higher interest rates by the Fed has added to the downside pressure. The pair largely shrugs off mixed UK economic data.
The UK Office for National Statistics reported that the UK economy contracted by 0.5% in December, down from 0.1% growth in the previous month and missing estimates for a 0.3% fall.
The disappointment in GDP data, however, was offset by better-than-expected UK Manufacturing and Industrial Production figures.
UK Manufacturing output arrived at 0% MoM in December versus -0.2% expectations and -0.6% registered in November while total industrial output came in at 0.3% MoM vs. -0.2% expected and 0.1% last.
On an annualized basis, the UK manufacturing production figures came in at -5.7% in December, beating expectations of -6.1%. Total industrial output dropped by 4.0% in the final month of the year against -5.3% expected and the previous -4.3% print.
Further, UK goods trade balance arrived at GBP-19.275 billion in December versus GBP-16.40 billion expectations and GBP-14.655 billion last. The total trade balance (non-EU) came in at GBP-7.484 billion in December versus GBP-3.493 billion previous.
Support levels - 0.8789 (55-EMA), 0.8770 (Cloud top)
Resistance levels - 0.8877 (5-DMA), 0.8886 (200H MA)
Summary: EUR/GBP poised for further downside. The pair eyes 55-EMA support at 0.8789. Break below cloud to drag the pair lower.
