EUR/GBP Retreats After Brief Rally, Mixed Signals Ahead
EUR/GBP edged slightly higher on Thursday but surrendered gains that briefly pushed the pair towards 0.8570. Softer-than-expected German inflation data sparked expectations for earlier rate cuts by the European Central Bank (ECB). February's preliminary German Harmonized Index of Consumer Prices (HICP) showed continued inflation at 2.7% year-on-year, albeit slower than January's reading.
Notably, core inflation, a key metric for the ECB, dropped to 2.5%, suggesting a potential shift in ECB policy. President Christine Lagarde has hinted at possible rate cuts this summer, with markets anticipating substantial easing by the bank in 2024.
However, technical indicators offer a mixed outlook for EUR/GBP. While the Relative Strength Index (RSI) remains in positive territory, its flat trajectory implies equilibrium with neither bulls nor bears gaining a clear advantage. The Moving Average Convergence Divergence (MACD) histogram shows declining momentum with a series of smaller green bars. These signals suggest buyers may struggle to maintain upward pressure. Maintaining a position above the 20-day Simple Moving Average (SMA) could keep the short-term outlook cautiously positive.
However, technical indicators offer a mixed outlook for EUR/GBP. While the Relative Strength Index (RSI) remains in positive territory, its flat trajectory implies equilibrium with neither bulls nor bears gaining a clear advantage. The Moving Average Convergence Divergence (MACD) histogram shows declining momentum with a series of smaller green bars. These signals suggest buyers may struggle to maintain upward pressure. Maintaining a position above the 20-day Simple Moving Average (SMA) could keep the short-term outlook cautiously positive.