EUR/GBP under pressure below 0.8750

• The Consumer Price Index in the Eurozone in March matched expectations at 1.4% y/y while core CPI missed at 1.0% y/y versus 1.1% y/y expected.
• The EUR/GBP is trading below 0.8750 as bear keep the pressure on the cross. 

The EUR/GBP is trading at about 0.8735 virtually unchanged on Wednesday. The main theme on the FX markets is the escalating trade war between the world's two biggest economies. In response to Trump’s tariffs on steel and aluminum, China imposed a 25% trade tariffs on a multitude of US goods including cars, aircrafts and also soybeans. The main stock indices in the US are still trading near their yearly lows as the fears of a global downturn is mounting among investors. 

The next release of macroeconomic data concerning in the Eurozone and the UK will be on Thursday with Markit Services PMI in March for both economies. Retail sales and the factgory gate inflation in the Eurozone will also be released on Thursday. 

Earlier in the European session the Eurozone flash Consumer Price Index (CPI) rose 1.4% year-on-year in March and the core CPI came below analysts expectation at 1.0% year-on-year against 1.1% forecast. The unemployment rate in the Eurozone in February matched analysts’ forecast at 8.5%.  

Meanwhile, in the UK, the construction industry droppedwith constuction PMI decreasing to 47.0 in March from 51.4 in the previous month, indicating the industry is in the territory of economic contraction.

EUR/GBP weekly chart

The EUR/GBP is currently trading in a wedge bull flag on the weekly chart. The cross is trading above its 100 and 200-period simple moving average while the RSI and MACD are in bearish territory.

EUR/GBP daily chart

The bulls have been defending the 0.87 handle since late September 2017 and is seen as the main support on the EUR/GBP. If it breaks the next support key support is seen at the 0.85 figure previous demand zone. The market is trading below its 50, 100 and 200-period simple moving averages on the daily chart. 

EUR/GBP 4- hour chart

The market found resistance at 0.8755 with the 50-period simple moving average and the bears will try to retest the 0.8713 swing low and support. If it fails the next significant level of support is seen at 0.8668 cyclical low. The resistance to break for bulls is the 0.8760 swing high, followed by the 0.88 level which has been acting as main resistance and support zone for many weeks.