Trading idea for EUR/GBP on July 3, 2024
On Wednesday, the most popular forex cross EUR/GBP shows a moderate recovery, trading near 0.8470. Euro buyers became more active after yesterday's sell-off, when the pair retreated from the local high of 0.8500.
Earlier, the European currency was under pressure due to inflation data in the Eurozone. The preliminary Harmonized Consumer Price Index (HICP) of the Eurozone in June amounted to 2.5% in annual terms against 2.6% in the previous month. The base indicator remained at 2.9% in annual terms with a forecast of 2.8%, and changed from 0.4% to 0.3% on a monthly basis. In response, officials of the European Central Bank (ECB) are being cautious when talking about the prospects of the regulator's monetary policy. ECB President Christine Lagarde noted that the Central Bank will need more time to ensure a steady decline in inflation to the target level of 2%, and therefore monetary policy easing will take place gradually and slowly. Lagarde also stressed that the risks of recession have not disappeared anywhere, and the prospects for economic growth remain uncertain. ECB chief Economist Philip Lane said that the data for June was in line with ECB expectations, which means there is a high probability of further rate cuts.
Although the prospect of easing European monetary policy is a negative factor for the euro, its impact can only be assessed over time. This week, traders should focus on the parliamentary elections in England, which will be held tomorrow. British Prime Minister Rishi Sunak admitted the possibility of the defeat of the Conservative Party led by him in the elections, after which the winning party will form a new government. Political uncertainty in the UK may put pressure on the pound in the coming days, which creates the potential for the EUR/GBP pair to rise above 0.8500.
Trade recommendation:
- Buy Stop 0.8500,
- target 0.8650,
- stop loss 0.8450.