Current trend

The EUR/GBP pair is holding a downtrend at 0.8328 during the Asian session. The euro is losing ground amid a decline in activity in the real sector.

However, the situation may change after the publication of the consumer price index in France and Spain. They fell from 0.5% to –1.2% and from 0.0% to –0.6% MoM, and from 1.8% to 1.2% and from 2.3% to 1.5% YoY. The Q2 gross domestic product (GDP) in Spain remained at 0.8%, justifying analysts’ forecasts, and accelerated from 2.9% to 3.1% YoY. Statistics confirm the effectiveness of the long-term tightening of monetary parameters by the European Central Bank (ECB), aimed at slowing inflation, and now experts are confident that officials will change course and at the next meeting, they will again cut the interest rate by a low of 25 basis points.

The pound look much more stable than the euro, and even neutral macroeconomic reports support it. The total volume of retail trade last week added 1.0% but the number of visits to shopping centers decreased by 3.0%. In turn, domestic companies are actively hiring. The total number of online job advertisements increased by 1.0%, which, however, is still lower than last year’s figures of 16.0%. Only 9.0% of enterprises said they were ready to increase capital expenditure in September, and 31.0% plan to keep it at the same level, slightly lower than the previous data, at 12.0% and 33.0%, respectively.

Against this background, the EUR/GBP pair may trade in a downtrend, gradually transiting to lateral dynamics.

Support and resistance

The trading instrument is at the support line of the channel with dynamic boundaries of 0.8560–0.8300, preparing to test the support level and strengthen the downward movement.

Technical indicators have given a sell signal: fast EMAs on the Alligator indicator are moving away from the signal line, and the AO histogram is forming downward bars below the transition level.

Resistance levels: 0.8360, 0.8450.

Support levels: 0.8320, 0.8240.

Trading tips

Short positions may be opened after the price declines and consolidates below 0.8320, with the target at 0.8240. Stop loss — 0.8370. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 0.8360, with the target at 0.8450. Stop loss is around 0.8310.