EURGBP climbs higher after surprising CPI UK data
22 March 2023
Today, the FED will decide about the interest rate and we should expect massive moves on the USD and stocks. The safer option with less volatility is probably the EURGBP, our today’s hero. Here, we already learned the crucial data. Early in the morning, before the American session, the UK posted the inflation data that came higher than expected and higher than reported in the previous month. In general, this should be a positive info for the Pound and initially, it indeed was, as the GBP strengthened.
It was just a first reaction, though. A few hours later, the GBP lost all the gains, which, in case of our pair, confirms the buy signal triggered yesterday. On Tuesday, the EURGBP made a key pivot for the mid-term situation on this pair. The price bounced off the long-term up-trendline (black) and the horizontal support on the 0.873 (green). What is more, the EURGBP came back above the neckline (red) of the head and shoulders pattern (yellow). This comeback is extremely bullish, as it means that the price being below the neckline was just a false bearish breakout (grey).
All this together means a proper buy signal. The GBP not using higher inflation data to strengthen is another confirmation of the weakness of the Sterling. The EURGBP will remain bullish, as long as the price stays above the green support. The chances of going lower are currently really low.