EUR/GBP advanced on Wednesday, reaching the vicinity of a two-week high near 0.8570, as the Euro strengthened against a softer British Pound. This move followed the release of July inflation data from both the UK and the euro area. The UK headline Consumer Price Index (CPI) rose 2.9% year-over-year, marking a four-month high and matching forecasts, while core CPI remained at 2.6%, slightly above the expected 2.5%. However, core services inflation, a key metric for the Bank of England (BoE), eased to 3.4% from 3.6%, which limited gains for Sterling after the data release [1].
In the euro area, the final reading confirmed headline inflation at 2.9% for July, unchanged from June and remaining above the European Central Bank's (ECB) target. This persistent price pressure, in line with expectations, helped the Euro maintain its strength [1]. The broader market context featured a global bond-market squeeze, with German and UK long-end yields elevated due to inflation and fiscal concerns. US Treasury yields, however, retreated from multi-year highs as traders awaited the Federal Reserve's FOMC Minutes, which are expected to influence risk sentiment [1].
Technical analysis showed EUR/GBP trading at 0.8572, above both the 20-period and 100-period Simple Moving Averages, indicating a modest bullish bias. The Relative Strength Index (RSI) near 68 suggested strong upward momentum, though it also hinted at a potential short-term pause if buyers hesitate near current highs. Immediate resistance was identified at 0.8573, with further gains possible if this level is breached. Initial support was seen at the 0.8563/0.8561 band, with additional support at the 100-period SMA and lower horizontal levels, where dip-buying interest could emerge [1].
Looking ahead, investors are focused on the upcoming FOMC Minutes for insights into the Federal Reserve's policy stance, particularly given reports of three dissenters favoring a rate hike at the last meeting. The tone of these Minutes is expected to steer broader risk sentiment into the European close [1].
CONCLUSION
EUR/GBP's push to a two-week high was driven by cooling UK core services inflation and steady euro-area price pressures. Technical indicators suggest a bullish bias, though momentum may pause near current highs. Market participants are now awaiting the FOMC Minutes for further direction.