EUR/GBP fell slightly to 0.8690, with the market focusing on the Eurozone HICP and Lagarde's speech
2025-09-17 14:35:20
The EUR/GBP pair retreated slightly to around 0.8690 during Asian trading on Wednesday, extending its gains of over 1% from the previous session and consolidating. Currency crosses performed subduedly, influenced by UK inflation data. Traders will turn to the final Eurozone High Inflation Rate (HICP) data and Christine Lagarde's speech to assess the ECB's future policy direction.
UK data showed that the CPI rose 3.8% year-on-year in August, slightly below the expected 3.9% but well above the 2% inflation target. Month-on-month inflation reached 0.3%, in line with expectations. Core CPI (excluding food and energy) rose 3.6% year-on-year, in line with market expectations and slightly down from 3.8% in July.
Services inflation fell to 4.7% (5% in July), indicating that some inflationary pressures have eased.
EUR/GBP may face short-term pressure as the British pound is likely to gain relative strength underpinned by support. Signs of accelerating inflation could reinforce market expectations that the Bank of England will maintain interest rates at 4%, limiting the downside for the British pound against the euro.
In Germany, the ZEW economic sentiment index rose to 37.3 in September (from 34.7 in August), exceeding market expectations of 27.3, but the current conditions index deteriorated to -76.4 (from -68.6 in August). The eurozone ZEW economic sentiment index also rose slightly to 26.1, exceeding expectations of 20.3.
Shaun Osborne and Eric Theoret, chief foreign exchange strategists at Scotiabank , said that stronger-than-expected ZEW investor confidence data from Germany and the euro zone reinforced the adjustment of the ECB's expectations of moderate easing, providing fundamental support for the euro through yield differentials.
From a technical perspective, the EUR/GBP pair is maintaining a short-term consolidation pattern, currently hovering between 0.8670 and 0.8720. The price is slightly above the 20-day moving average, suggesting a temporary balance of forces between bulls and bears.
The daily RSI is nearing neutral, indicating that buying and selling momentum has yet to clearly favor one side. A break below the 0.8670 support level could lead to a further decline to around 0.8650. Conversely, a break above the 0.8720 resistance level could extend the rally to the recent high of 0.8750, suggesting a short-term trend of volatility and opportunity seeking.
Editor's opinion:
The EUR/GBP trend is influenced by both UK inflation data and Eurozone fundamentals: the British pound is supported by the high UK CPI, maintaining stable interest rate expectations, which puts a certain pressure on EUR/GBP; the improvement in the euro's fundamentals (the rise in the German and Eurozone ZEW indices) provides support for the euro, but short-term fluctuations are limited.
UK data showed that the CPI rose 3.8% year-on-year in August, slightly below the expected 3.9% but well above the 2% inflation target. Month-on-month inflation reached 0.3%, in line with expectations. Core CPI (excluding food and energy) rose 3.6% year-on-year, in line with market expectations and slightly down from 3.8% in July.
Services inflation fell to 4.7% (5% in July), indicating that some inflationary pressures have eased.
EUR/GBP may face short-term pressure as the British pound is likely to gain relative strength underpinned by support. Signs of accelerating inflation could reinforce market expectations that the Bank of England will maintain interest rates at 4%, limiting the downside for the British pound against the euro.
In Germany, the ZEW economic sentiment index rose to 37.3 in September (from 34.7 in August), exceeding market expectations of 27.3, but the current conditions index deteriorated to -76.4 (from -68.6 in August). The eurozone ZEW economic sentiment index also rose slightly to 26.1, exceeding expectations of 20.3.
Shaun Osborne and Eric Theoret, chief foreign exchange strategists at Scotiabank , said that stronger-than-expected ZEW investor confidence data from Germany and the euro zone reinforced the adjustment of the ECB's expectations of moderate easing, providing fundamental support for the euro through yield differentials.
From a technical perspective, the EUR/GBP pair is maintaining a short-term consolidation pattern, currently hovering between 0.8670 and 0.8720. The price is slightly above the 20-day moving average, suggesting a temporary balance of forces between bulls and bears.
The daily RSI is nearing neutral, indicating that buying and selling momentum has yet to clearly favor one side. A break below the 0.8670 support level could lead to a further decline to around 0.8650. Conversely, a break above the 0.8720 resistance level could extend the rally to the recent high of 0.8750, suggesting a short-term trend of volatility and opportunity seeking.
Editor's opinion:
The EUR/GBP trend is influenced by both UK inflation data and Eurozone fundamentals: the British pound is supported by the high UK CPI, maintaining stable interest rate expectations, which puts a certain pressure on EUR/GBP; the improvement in the euro's fundamentals (the rise in the German and Eurozone ZEW indices) provides support for the euro, but short-term fluctuations are limited.
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