The EUR/GBP increased today and resumed the last day’s bullish momentum. It remains to see what will really happen because the rate continues to move in range on the Daily chart. Technically, it has shown some oversold signals, so a buying opportunity may appear soon. However, it is premature to talk about a further increase as long as the rate is trading below a major static resistance level.
Price has increased even if we had some very good data from the United Kingdom. The rate is fighting hard to close and to stabilize in the buyer’s territory but remains to see if will have enough bullish energy to do this.
The Euro has also increased versus the USD and now only versus the Cable, the French Prelim Private Payrolls rose by 0.3%, more versus the 0.2% estimate, actually the growth remained steady at 0.3% in the fourth quarter.
On the other hand, the UK’s data have come in mixed, the CPI rose by 3.0% in January, beating the 2.9% estimate, the Core CPI increased by 2.7%, more versus the 2.6% estimate and versus the 2.5% growth in the former reading period, while the HPI surged by 5.2%, beating the 4.9% estimate and the 5.0% growth in the previous reporting period. The PPI Input has come in line with expectations, but the RPI and the PPI Output have disappointed.
The rate continues to move between the 38.2% and the 61.8% retracement levels, so only a valid breakout from this pattern will bring us a great trading opportunity. You can see that the rate has failed to reach and test the outside sliding line, it has made higher lows signaling that it could jump above the lower median line (LML) again.
I’ve said in the previous week that only a valid breakout above the 38.2% retracement level will confirm a further increase towards the fifth warning line (wl5). A larger drop will come only if the rate will take out the dynamic support from the outside sliding line. Personally, I believe that it will take out this support if will reach it.