Euro extends losses against British Pound as Eurozone inflation fails to impress

The Euro (EUR) is experiencing a decline against the British Pound (GBP) on Tuesday, due to lower inflationary pressures in the Eurozone and disappointing German Retail Sales figures. The EUR/GBP pair has retreated to 0.8560 from session highs near 0.8575, but remains within a narrow range between 0.8555 and 0.8585. Eurostat data released earlier showed that the Eurozone's HICP inflation grew by 3.3% year-on-year (Y-o-Y) in August, the same pace as the previous month and in line with market forecasts.

However, core HICP inflation slowed to 2.4% Y-o-Y, less than the expected 2.5%. The Eurozone's Manufacturing PMI was revised downward to 52.7 in August, from the previous 52.7 estimate, while German Retail Sales fell by 3.4% in July, the steepest decline in over four years, a significant letdown. In the UK, Tuesday's agenda is dominated by the Bank of England Governor Andrew Bailey's speech on Friday, where investors await confirmation that the bank will raise interest rates at its monetary policy meeting on September 16.

EUR/GBP is currently trading at 0.8562, supported by a slightly restricted range, but technical indicators are turning bearish as the 4-hour Relative Strength Index (14) falls below 50 and the Moving Average Convergence Divergence (MACD) indicator hovers near zero. Bears may face resistance between 0.8555 and 0.8545 (August 25, 28, and 31 lows), but the key support level is the August 12 low at 0.8531.

A break below this level would confirm a multiple top between 0.8575 and 0.8585, shifting focus to the July 20 and 21 lows at 0.8485 and 0.8490, respectively. If prices surpass last week's high of 0.8578 and the late July highs around 0.8585, a bullish extension could be signaled, aiming for late June lows just above 0.8600.