EURGBP eyes support ahead of UK CPI print

EURGBP initially began the year in a fairly well-defined trading range but showed bullish impetus after breaking out of the consolidation pattern. However, bullish momentum appeared lacking, as the pair struggled to maintain a steady directional move and has since shown a penchant towards mean reversion.

0.8635 proved too high to handle for the pair previously but the most recent bullish advance fell short of that, finding resistance around the 200-day simple moving average (SMA) before heading lower.

The current spate of selling is showing signs of fatigue as the pair attempts to trade higher after four successive days of losses. The pair could find itself propped up by trendline support, which caught the bottoms in April and earlier on in May.

Keep an eye out for UK CPI tomorrow where there is an expectation of a notable move lower from the prior month. With such optimism, comes the potential for disappointment if the actual data fails to reach the low levels anticipated which may see sterling lift in the moments after the print. April data has the potential to surprise to the upside as this is the month when annual price rises and index-linked increases are implemented. On the other side of the equation, if the CPI data prints inline or lower than consensus estimates, EURGBP may rise off support as markets clear the way for a Bank of England cut sooner rather than later.

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