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Today the EUR/GBP pair is rising for the second consecutive day. Despite weak German economic data, the pair extended its upward movement. Market focus now shifts to the upcoming preliminary German consumer price index (CPI) report.
According to Germany's Federal Statistical Office (Destatis), retail sales in July increased by 1.9% year-on-year, below expectations of 2.6% and the previous 4.9%. On a monthly basis, sales fell by 1.5%, also worse than the projected 0.4% decline.
Minutes from the ECB's July meeting show that the regulator is leaning toward lowering inflation risks over a two-year horizon amid weaker growth forecasts and the impact of U.S. tariffs. However, some Governing Council members noted that long-term risks could shift upward due to uncertainty in the energy market and currency fluctuations.
The potential for further growth in the EUR/GBP pair may be limited by pound strength. The Bank of England maintains a hawkish stance, and the likelihood of rate cuts in 2025 remains low. Inflationary pressure in the UK continues to build, with July's CPI accelerating to 3.8% year-on-year, up from May's reading.
From a technical perspective, prices managed to break above the 9-day EMA, confirming bullish momentum, though resistance has formed at 0.8675. If this level is cleared, the round level of 0.8700 should be reached easily, followed by resistance at 0.8730 on the way to the July high around 0.8753.
On the other hand, the pair found support at 0.8635, the Asian session low. The next support lies at 0.8610 ahead of the 0.8600 round level; a break below would confirm a bearish outlook. However, the Relative Strength Index (RSI) has risen above the 50 mark, indicating that there is still potential for further upside in the pair.
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