EUR/GBP is trading lower ahead of UK’s Composite and Services Purchasing Manufacturing Index (PMI) for July.
European Economic Outlook
UK’s Manufacturing PMI data for July came in lower at 60.4. however, it hit analysts’ forecast despite declining from 63.9 to 60.4. Resource and staff shortages hampered faster growth of output and employment.
Eurozone Manufacturing PMI data was also published on Monday. According to the data released, the manufacturing index fell, albeit beat estimates. It came in lower at 62.8 surpassing the estimated 62.6. it slipped from the previous 63.4 in June.
The EUR/GBP pair will react to the Composite and Services PMI in both the United Kingdom and Eurozone. The Composite PMI for the UK is expected to remain unchanged at 57.7 for July. The country’s Services PMI for the same month is also expected to be at a standstill at 57.8.
Eurozone’s Markit Composite PMI for July is expected to linger at 60.6. This is due to the surging cases of the Coronavirus which weighed heavily on demand. The Services PMI for the same month is expected to remain at a standstill at 60.4.
Eurozone’s monthly retail sales data for June is scheduled to be released on Tuesday. The retail sales are expected to dip to 1.7% from the previous 4.6%.
EUR/GBP Technical Outlook
At the time of writing, EUR/GBP was treading on negative territory down 0.12% at 0.8538. The pair surged to an intraday high of 0.8554 before pulling back.
On the 4-hour chart, it is trading along the 25-day exponential moving average and slightly below the 50-day EMA.
In the near term, I expect the pair to extend its trend to the downside to find support within the 25-day EMA at 0.8530. Below that the bears will be targeting the psychological level at 0.8500.
On the flip side, depending on UK’s PMI data, the currency pair is likely to correct to the upside and find its resistance at its intraday high. Above this level, the bulls market will be eyeing July’s highest level at 0.8670.