- EUR/GBP has retraced from 4-month highs at 0.8931 hit overnight.
- The pair js holding above 0.89 handle and we see more upside on cards.
- GBP tumbled across the board after UK’s inflation figures failed to meet expectations.
- After poor inflation data markets wary as upcoming Retail Sales are expected to show contraction.
- June Retail Sales m/m is forecast to clock in at just 0.4%, compared to the previous month's 1.3%. The y/y Retail Sales for June are expected to remain flat at 3.9%.
- Monthly Core Retail Sales (excluding fuels) for June is also expected to decline, with traders calling for a slide from 1.3% to 0.3%.
- Technical indicators support further gains in the pair. We see scope for test of 61.8% Fib at 0.9044.
- Any positive surprise in the data could see momentary spike in GBP which could provide good entry opportunities.
- We see bullish invalidation only on break below 200-DMA.
Support levels - 0.89, 0.8876 (5-DMA), 0.8842 (21-EMA), 0.8818 (200-DMA)
Resistance levels - 0.8968 (Mar 7 high), 0.90, 0.9014 (Nov 15 high)
Recommendation: Good to go long on close above 0.89 handle, SL: 0.8860, TP: 0.8965/ 0.90/ 0.9045.
FxWirePro Currency Strength Index: FxWirePro's Hourly EUR Spot Index was at -61.2564 (Neutral), while Hourly GBP Spot Index was at -116.309 (Bearish) at 0600 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
