Pound weakness drives EUR/GBP higher, while GBP/USD and AUD/USD turn lower
The pound has been hit hard in the wake of the UK CPI data, with EUR/GBP reversing upwards and GBP/USD coming under pressure. Meanwhile, AUD/USD also looks to be at risk of another move lower.
EUR/GBP reverses after UK inflation decline
EUR/GBP looks to have ended its period of weakness that saw the pair lose 2% over the space of 10-days. With the decline in UK consumer price index (CPI) and core CPI quickening according to the data released this morning, there is reason to believe that the Bank of England (BoE) will be less inclined to tighten at their next meeting. EUR/GBP is a great market to be looking at, with the price reversing after the recent 76.4% Fibonacci retracement.
This wider bullish trend thus appears to be kicking in once again, with the push through trendline and £0.8848 resistance bringing greater confidence that we have bottomed out here. With that in mind, long positions are favoured unless price falls back below the recent low of £0.8803.
GBP/USD tumbles back below Fibonacci support
GBP/USD has seen a sharp move lower this morning, coming off the back of a 24-hour period that saw UK jobs, followed by inflation out of the US and UK. The declines we are seeing for the pound today have brought the price back down into the 76.4% Fibonacci support level, highlighting the potential for a bullish rebound from here.
Bear in mind that UK inflation at 10.1% is still well above US CPI of 6.4%. As things stand, that uptrend remains intact, with a break below the $1.2031 support level required to bring about a bearish reversal signal.
AUD/USD falls back into key support
AUD/USD has been attempting to regain ground over the past week, following a sharp decline that saw price fall through the key $0.6984 support level. The intraday pattern of higher highs and lows since is coming under pressure, with that bearish reversal looking to play out once again if we break below the $0.689 support level.
As things stand, we are seeing some last-minute support coming into play here, with a distinct possibility of another rebound remaining unless support is broken. Nonetheless, with the recent breakdown in mind, this past week does appear to be a retracement phase before the bears come back into play.
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