EUR/GBP defends 0.8600 ahead of UK, Eurozone CPI
- EUR/GBP edges higher after Tuesday’s upbeat performance.
- Pre-data caution, light feed trouble bulls amid mixed clues.
- Inflation figures will be the key despite being comparatively less crucial than US.
With a recent bounce off of 0.8612, EUR/GBP prints a less than 10-pip trading range during early Wednesday. In doing so, the quote portrays the traders’ cautious mood ahead of the key Consumer Price Index (CPI) data from Eurozone and the UK. Also troubling the bulls could be mixed catalysts concerning risk sentiment and light feeds in Asia.
With the Indian variant of the covid testing the UK’s unlock plans, optimism surrounding the British economy’s faster recovery from the pandemic fades of late. Even so, the UK’s trade deal with Australia and upbeat comments from the Bank of England (BOE) policymakers, published the previous day, keep EUR/GBP buyers hopeful.
Meanwhile, Brexit woes keep a tab on the bulls as the ex-neighbors recently jostled over the Northern Ireland (NI) border plan when the UK diplomat David Frost warned the European Union (EU) of a quick solution, before stepping back.
On the other hand, Brussels cheers the US dollar weakness despite struggling over the covid vaccine supplies and dealing with multiple pharma companies over the jab agreements. Additionally, the EU plan to freeze China investment plan, up for voting on Thursday, also tests the market sentiment.
Elsewhere, mixed chatters concerning the Fed’s next moves and the Asian struggle with the virus, not to forget hopes of further stimulus, reverse the S&P 500 Futures’ early Asian losses. The same seems to help the US 10-year Treasury yield to regain 1.65% level.
It’s worth mentioning that the inflation figures from the UK, likely to jump from 0.7% to 1.4% YoY in April, could help the British pound (GBP) and may exert downside pressure on the EUR/GBP prices, unless EU CPI arrives at stronger than 0.6% forecast, versus 0.9% prior.
Technical analysis
A confluence of 10-day and 50-day SMA around 0.8620 guards short-term EUR/GBP upside while bears have a bumpy road to the south, if at all entered, until breaking 0.8530.