The EURGBP currency pair gained 1.38% from the week’s low following a tick-up in inflation in Europe’s two biggest economies, Germany and France. The higher-than-expected inflation rate in Germany and France will be a precursor to the Euro Area inflation set to be released today.
With the European Central Bank (ECB) committed to taming inflation, rate hikes will prevail in the Euro Area, potentially giving the Euro an edge over the British Pound.
The EURGBP has recently commenced a downtrend as price entered into a downward trend channel. Support and resistance were established at the 0.87613 and 0.89146 levels, respectively.
With price trading near resistance and in the upper part of the trend channel, a breakout above the channel on high volumes could signal the presence of bullish traders likely willing to take the pair up towards the 0.89146 levels.
Alternatively, if bears look to respecting the trend channel’s pattern, a rejection of the 0.88864 level is probable, with the 0.88440 level or the current 100 Moving Average price potentially a take profit level for a selloff.
Traders will today look to the Euro Area’s inflation reading for cues on whether inflation will further lead to the ECB hiking rates in its battle. The 0.88440 level will be pivotal as it will likely make or break the current trend if the price breaks below it.
Sources: Reuters, TradingView