The EUR/GBP drops again and moves towards the extended sideways movement support. It remains to see what will happen in the upcoming period because is premature to talk about a larger drop as long as the rate continues to move sideways.

Price is somehow expected to drop further after the retest of a major dynamic resistance (support turned into support). EUR/GBP dropped aggressively in the last days, but remains to see if the Cable will have enough directional energy to drag the price in the seller’s territory.

The rate is trading in the red and could turn to the upside only if the fundamental factors will take the lead again.

The Pound could lose some ground versus all its rivals on the short term as the United Kingdom’s inflation data have failed to impress earlier. The CPI rose only by 2.7% in the previous month, less versus the 2.8% estimate and compared to the 3.0% in the formed reading period, while the Core CPI surged only by 2.4%, less versus the 2.5% forecast. The PPI Input dropped by 1.1%, more versus the 0.9% estimate and after the 0.4% growth in the former reading period, the HPI increased by 4.9%, less versus the 5.1% estimate, the PPI Output increased only 0.0%, while the RPI by 3.6%, less versus the 3.7% estimate.

You can see on the daily chart that we have an extended sideways movement, so only a valid breakout from it will bring a clear direction and a fresh trading signal. EUR/GBP has come back to test and retest the lower median line (LML) of the major red ascending pitchfork, it has failed to close above it signaling an exhaustion.

Price should approach and reach the outside sliding parallel line (SL) of the ascending pitchfork and the 61.8% retracement level, actually, it could be attracted by the confluence area formed between the mentioned support levels. A valid breakdown will accelerate the sell-off.