EUR/GBP loses the 20-day SMA ahead of key British economic data

EUR/GBP declined for a second consecutive day, and fell towards 0.8605, below the 20-day SMA.
All eyes are now on labour market and inflation data from the UK.
The Eurozone will release its preliminary Q2 GDP report on Wednesday.

At the start of the week, the EUR/GBP fell below the 20-day Simple Moving Average (SMA) near the 0.8605 area. No relevant data releases will feature on Monday’s economic calendar as attention shifts fo high-tier data released from both blocks later in the week.

On the GBP’s side, on Tuesday, the Office for National Statistics (ONS) will release key labour market data, including earning figures from the three months up to June and Claimant Counts numbers from July. In addition, on Wednesday, inflation data will be released from July, and overall figures are expected to show a robust labour market and decelerating inflation. Its worth noticing that the Bank of England (BoE) no longer expects a recession but that the bank will do whatever it takes to bring down inflation, so the outcome of the data will likely shape the expectations of the BoE’s next decision and hence having an impact on the Pound’s price dynamics.

On the European side, markets await Gross Domestic Product (GDP) preliminary figures for Q2 from the Eurozone, which is expected to have stagnated, and the Harmonized Index of Consumer Prices (HIICP) from July, which will be released on Friday.

EUR/GBP Levels to watch

The daily chart suggests that a neutral to bearish trend becomes evident for EUR/GBP, with the bears gradually taking control. The Relative Strength Index (RSI) has a negative slope above its midline, indicating weakening buying pressure, while the Moving Average Convergence (MACD) prints decreasing green bars. In addition, the pair is below the 20,100 and 200-day Simple Moving Average (SMA), pointing towards the prevailing strength of the bears in the larger context.

Support levels: 0.8600, 0.8590, 0.8570.

Resistance levels: 0.8610 (20-day SMA), 0.8630, 0.8650.