Euro stays neutral against Pound ahead of UK inflation data
EUR/GBP trades in the mid-0.8500s, unable to reclaim the 0.8600 barrier on Tuesday as the Euro (EUR) has struggled even after the European Central Bank (ECB) raised its three key rates by 25 basis points (bps) on September 10, lifting the deposit rate to 2.50%.
Euro hovers near the 0.8500 mark against the Pound, failing to break the 0.8600 level on Tuesday. The Eurozone sentiment survey fell short of expectations, and the UK's jobs report was weaker than anticipated. The Pound remains strong due to the rate gap between the UK and the Eurozone. The upcoming UK inflation report on Wednesday will be crucial, as a rise in headline annual inflation to 3.1% from 2.9% could keep the BoE's hawkish minority active, pushing EUR/GBP closer to the lower end of its range.
The Bank of England is expected to keep rates unchanged on Thursday, making the vote split and guidance more important than the decision itself. On the 4-hour chart, EUR/GBP is at 0.8558, trading below both the 20-period and 100-period SMAs, indicating bearish sentiment. The RSI suggests persistent downside pressure, while nearby resistance is at 0.8559, followed by horizontal barriers at 0.8562 and 0.8565. Lower support is at 0.8554, where a break would open the door to further declines.
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