EUR/GBP was nearly trading flat after the release of the UK’s inflation data for July. The pair was trading at £0.8526 ahead of the European inflation data later in the day.
European Inflation Stance
According to the Office for National Statistics (ONS), the UK Consumer Price Index, including owner occupiers’ housing costs (CPIH,) advanced 2.1% in the 12 months to July 2021. However, this was a decline from the 2.4% annualized rate in June 2021.
Transport was the largest contributor to the annualized CPIH inflation rate. Over July 2021, the CPIH remained unchanged compared to the 0.4% in July 2020. The drags in the index were clothing and footwear, and a variety of recreational goods and services.
The Consumer Prices Index (CPI) rose 2.0% on a year-on-year basis in July. It declined from the 2.5% increase in June 2021. Over the month, the CPI remained at a standstill after a 0.5% increase in the previous month.
The headline rate of output prices increased 4.9% on the year to July 2021, up from 4.5% in June the same year. Transport equipment was the biggest boost in the annual output rate. The headline rate of input prices rose 9.9% YoY, up from 9.7% in June 2021. Metals and non-metallic minerals provided the biggest drive in the annual input rates.
The EUR/GBP pair will react to the European CPI data for July. With the resurgence of coronavirus infections and strict restrictions across most European countries, economists expect the European inflation data for July to remain at a standstill.
EUR/GBP Technical Outlook
The four-hour chart indicates that the EUR/GBP has been on an upward trend for the last two weeks. Along the way, the pair has formed a triple bottom, reinforcing this view. It hit an intraday low of £0.8518 before reversing.
The currency pair is trading above 25 and 50-day exponential moving averages, hinting at a bullish uprun.
Therefore, I expect the pair to continue with its uptrend. The bulls will be targeting the resistance at £0.8600. However, a move below the support at £0.85005 might push the price lower to find support at £0.84596, thus invalidating the bullish trajectory.