EUR/GBP eases slightly despite steady UK retail sales data

• EUR/GBP was marginally lower at 0.8530, snapping a two-day losing streak.
• The cross fell despite the release of steady UK retail sales data during the European session.
• The data favors that the BoE will continue to cut rates.

Friday’s trading presented a slightly less vibrant picture for EUR/GBP, which fell to 0.8530 as investors digest mixed UK retail sales figures.

UK retail sales showed signs of recovery in July, with total retail sales rising 0.5% month-on-month, slightly below expectations but improving from a revised fall of 0, 9% in June (previously reported as -1.2%). Year-on-year, retail sales rose 1.4%, in line with expectations and up from a revised -0.3% in June (previously reported as -0.2%).

This increase in sales is in line with the improvement seen in the British Retail Consortium’s same-store sales for July, signaling a strong start to the third quarter. Despite solid Q2 GDP numbers, June data indicated a slowdown at the end of the quarter. Overall, economic activity appears to be weak, which could prompt the Bank of England to continue tapering.

Technical analysis EUR/GBP

Over the last few sessions, EUR/GBP is primarily trapped between the 200-day and 100-day simple moving averages (SMAs) at support and resistance levels of 0.8550 and 0.8510, respectively, and volume figures signifies a gradual decrease in selling pressure. The fact that the bulls gave up the 200-day SMA on Thursday paints the outlook lightly.

Technically, the pair’s Relative Strength Index (RSI) is lingering in the mid-50s, indicating a balance in market sentiment, with neither bulls nor bears taking control, but with a noticeable downtrend. The MACD (Moving Average Convergence Divergence) indicator is showing declining green bars, suggesting possible downward momentum in the coming trading sessions.

EUR/GBP daily chart