- The EUR/GBP is trading below the 0.8750 level.
- Earlier in Europe, the Eurozone and German inflation data matched analysts’ expectations which sparked some more euro selling pressure.
The EUR/GBP pair is trading at around 0.8745 down 0.23% on Wednesday.
After trading relatively flat in Asia around 0.8760, EUR/GBP in the early European session got a temporary boost to the 0.8780 level, after which bears took the lead and drove the currency cross down about 50 pips below the 0.8750 level in the US session.
The pair is struggling to find a clear longer-term directional path as both currencies are rather weak especially against the USD.
Earlier in Europe, the Eurozone and German inflation matched analyst’s expectations and euro bulls were far from impressed and the single currency traded lower against both the British pound and the US dollar.
Meanwhile, the euro is also slightly negatively affected by the political situation in Italy. It has been reported that the Five Star movement and Lega are planning to ask the European Central Bank to forgive € 250 billion of Italian debt. According to the Huffington Post, a draft of the coalition read: “economic and judicial procedures that allow (EU) member states to leave monetary union". The two leading Italian parties said, “not to call into question the single currency". However, “ even just mooting the possibility of a euro exit is negative for the single currency,” according to analysts at Reuters.
EUR/GBP 4-hour chart
The trend is neutral, support is seen at 0.8727 swing low established on May 9, followed by the 0.8680 swing low of April 26 and finally the cyclical low at 0.8620 made on April 17. To the upside, bulls should expect resistance at the 0.8780 level previous swing high and home of the 100-period simple moving average on the 4-hour time-frame. The next scaling point to the upside is likely the 0.8844 swing high made on May 4.