The Euro (EUR) continued to nurse minor losses against the British Pound (GBP) on Wednesday, trading just above the 0.8655 support area after declining nearly 0.7% so far this week [1]. The movement comes in the wake of key inflation data releases from both the Eurozone and the UK. The Eurozone's final Harmonized Index of Consumer Prices (HICP) confirmed that yearly inflation rose to 3% in April from 2.6% in March, which adds pressure on the European Central Bank to consider hiking interest rates despite signs of weakening economic activity [1].
In contrast, UK consumer inflation eased beyond expectations in April, which may give the Bank of England more flexibility to keep its monetary policy unchanged at its June meeting. The Pound responded to this data with moderate declines [1]. Technical analysis indicates that EUR/GBP's immediate trend has shifted to bearish this week, following a sharp reversal from last week's highs. The 4-Hour Relative Strength Index (RSI) is around 39, suggesting ongoing downside pressure, while the Moving Average Convergence Divergence (MACD) remains negative, indicating that recent rebounds are likely corrective [1].
Bears are currently targeting the weekly low near 0.8645, with further downside potential toward the May 11 low at 0.8630. On the upside, resistance is expected near 0.8680, which aligns with the 200-period moving average and the 38.2% Fibonacci retracement of this week's sell-off, as well as Tuesday's high above 0.8685. The 61.8% Fibonacci retracement coincides with the March 15 lows in the 0.8700 area [1].
A table of percentage changes shows that the Euro has been the strongest against the Australian Dollar this week, while it has lost 0.55% against the US Dollar and 0.73% against the Pound [1].
CONCLUSION
EUR/GBP remains under pressure following divergent inflation data from the Eurozone and UK, with technical indicators pointing to a bearish trend. The market is closely watching key support and resistance levels, as well as upcoming central bank policy decisions, for further direction.