EUR/GBP consolidates just above 0.8560 as Euro and Pound Sterling fight for last place

• The EUR/GBP has been in a tight consolidation range this week as both currencies see declines.
• European Retail Sales disappointed, remain in contraction territory despite a moderate rebound.
• Eurozone GDP coming up on Thursday, markets expecting a flat reading.

The EUR/GBP pair remains in a tight consolidation range on Wednesday, just north of 0.8560 as the Euro (EUR) and the Pound Sterling (GBP) compete for last place, with both currencies losing ground against all the other major currencies except each other, with the two battling into the midrange. 

The Euro is the winner in the EUR/GBP competition on the week, but only by a scant margin with the pair up a scant tenth of a percent from the week’s opening bids near 0.8565.

The latest Financial Stability Report from the Bank of England (BoE) shows the UK’s central bank continues to grapple with a lopsided economy, with the BoE noting that downside risks remain despite a well-capitalized banking sector and easing inflationary pressures.

European data continues to disappoint, BoE hampered by wobbly outlook

The Eurozone is seeing weak points of its own, with annualized Retail Sales for the year into October declining a further 1.2% from the previous month’s -2.9%, a limited recovery that still sees Retail Sales shrinking and missing the market’s forecast of -1.1%.

Thursday will bring another round of Eurozone data with the third quarter’s Gross Domestic Product (GDP) figures; the median market forecast is calling for a QoQ flat reading at -0.1%, in-line with the second quarter’s print.

Friday will round out the EUR/GBP’s data showings with UK Consumer Inflation Expectations for the next 12 months; in the second quarter UK consumers last expected inflation to land somewhere around 3.6% in the next year.

EUR/GBP Technical Outlook

With intraday action getting hung up in the middle, the EUR/GBP is trading directly into the 50-hour Simple Moving Average (SMA), with near-term upside potential capped off by a bearish 200-hour SMA descending into 0.8620.

Despite playing into the midrange for the week, the EUR/GBP remains firmly buried in bearish chart territory, having fallen two and a quarter percent from late November’s peak of 0.8765.

The Euro’s decline in recent weeks leaves the EUR/GBP precariously oversold, but lack of an upside recovery, even if it's just for a bounce, has left the pair waffling into the bottom end and challenging bids last seen in September, with a loose technical support zone roughed in from a collection of swing lows just north of the 0.8500 handle.

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