We see a technical case for EUR/GBP to top out over the near-term, which could be helped if Germany deliver a soft inflation report today. The baulk of today’s economic data is from Germany, with employment data at 08:55 GMT then inflation at 13:00. UK manufacturing PMI is scheduled for 09:30, then manufacturing PMI data is then released for Canada and the US at 14:30 and 14:45 respectively.
EUR/GBP has been rising along with GBP-EUR yield differentials as traders price in a more hawkish ECB in 2023. However, the rally lost steam as it approached the October highs and produced a couple of low liquidity Doji’s below that key level. Momentum has turned lower today so we suspect an interim top has formed and prices are due to pull back towards 0.8800. Also take note that the 20-day EMA is near the monthly pivot point around 0.8760 which makes it a potential target for a deeper pullback.
EUR/GBP has been rising along with GBP-EUR yield differentials as traders price in a more hawkish ECB in 2023. However, the rally lost steam as it approached the October highs and produced a couple of low liquidity Doji’s below that key level. Momentum has turned lower today so we suspect an interim top has formed and prices are due to pull back towards 0.8800. Also take note that the 20-day EMA is near the monthly pivot point around 0.8760 which makes it a potential target for a deeper pullback.