On Thursday, EUR/GBP is developing a moderate upward movement formed the day before and is approaching the resistance at 0.8750.
Yesterday, the UK inflation report came out, showing a slowdown in consumer prices from 0.5% to 0.0% (m/m) and from 6.7% to 4.6% (y/y). Core inflation fell from 6.1% to 5.7% with a forecast of 5.8% (y/y). The retail price index came down 0.2% for the month or from 8.9% to 6.1% (y/y). Investors believe that after such statistics the Bank of England will refuse to continue the cycle of rate hikes.
In the Eurozone, industrial production in September decreased by 1.1% in monthly terms and by 6.9% in annual terms. Before that, there was a weak report on the production of consumer goods. Germany's wholesale price index fell from 0.2% to (-0.7%) (m/m) and from (-4.1%) to (-4.2%) (y/y).
The Eurozone releases its inflation report on Friday. Investors do not expect significant fluctuations in the indicator.
Technical analysis for EUR/GBP for today
The Bollinger Bands indicator on the daily chart is weakly directed to the upside. The MACD indicator is rising in the positive range and holds a buy signal. The Stochastic oscillator was declining but has reversed to the upside.
Entry into purchases will be advisable after price consolidation above 0.8750. The nearest target is at 0.8817. Stop-loss will be placed at 0.8710.
If the buyers fail to break above 0.8750, we wait for the price to consolidate below the support at 0.8710. From here we enter short positions with the target mark at 0.8656. Stop-loss will be set at 0.8750.