Both the euro zone and the U.K. economy are gearing up to print their August flash PMIs soon.
Can EUR/GBP bounce off these inflection points?
Number crunchers are counting on mixed results from Germany and France while the U.K. might report slower business activity for both sectors.
EUR/GBP 1-hour Forex Chart by TV
It’s also worth noting that the ECB just recently shifted to a less hawkish monetary policy stance, so a set of downbeat PMI readings might reinforce this cautious view.
Meanwhile, the BOE is still under pressure to hike interest rates, given how their latest batch of CPI figures came in stronger than expected.
In that case, nearby resistance levels on EUR/GBP might hold if euro region flash PMIs disappoint while U.K. figures beat estimates.
The handy-dandy Fibonacci tool shows that the 38.2% level at .8545 is already being tested, and holding as resistance might send the pair back down to the swing low at .8533. Watch out for a sustained bearish move if EUR/GBP breaks below this area, possibly taking it down to S1 (.8520).
A larger pullback might still reach the 50% Fib close to the .8550 minor psychological handle or the 61.8% level at .8551 ahead of the actual releases.
Technical indicators are reflecting the presence of bullish vibes for now, as Stochastic is pulling up from the overbought zone while the 100 SMA is above the 200 SMA.
Just make sure you account for the average EUR/GBP volatility when trading this one!
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