EUR/GBP steady around 0.8840, waiting for UK data and ECB

EUR/GBP is falling modestly on Wednesday as it consolidates between 0.8860 and 0.8830. The pair remains steady after a volatile Tuesday. 

EUR/GBP capped by 0.8900

Yesterday the pair jumped after UK inflation data. The rally was capped below the 0.8900 area. Afterward, the euro lost strength and started to pullback. The decline extended during today’s Asian session until it found support at 0.8825/30. From yesterday’s highs it dropped 70 pips. 

During the last hours, EUR/GBP has been consolidating, between 0.8860 and 0.8830. The short-term momentum is modestly tilted to the downside, but price should remain relatively quiet during the next hours. 

A busy Thursday 

Volatility is likely to rise again on Thursday. The first event that could impact on EUR/GBP is the UK retail sales report (08:30 GMT). Sales are expected to show a gain of 0.4% in June after a 1.2% drop in May. Markets could be more sensitive than before to UK data, after members of the Monetary Policy Committee created expectations of a possible rate hike from the Bank of England, much sooner than previously expected. 

GBP/EUR: Economic data have diverged – Lloyds Bank

Then will be the time of the European Central Bank, that will announce its decision on rates at 11:45 GMT. No change is expected. New forecasts will be released and Draghi will start speaking with the press at 12:30 GMT. Volatility across euro’s crosses could jump around that time. A message signaling some kind of tapering of the QE program in the short-term could boost the euro. 

ECB Meeting: warming up for tapering or not?

ECB to evolve its assessment and extend its removal of downside risks - BBH