EUR/GBP flirting with daily highs near 0.8880 post-CPI

• EUR/GBP moves higher to the 0.8880 area.
• UK CPI came in short of expectations in August.
• EMU final August CPI next on the docket.

Renewed GBP selling is now lifting EUR/GBP to the area of daily highs around 0.8880.

EUR/GBP up on disappointing CPI figures

The Sterling is now losing further momentum after UK inflation figures disappointed expectations in August. In fact, consumer prices rose at an annualized 1.7% (from 2.1%) and 0.4% from a month earlier. Also coming in below initial estimates, Core prices rose 1.5% over the last twelve months and 0.4% inter-month.

The European cross is thus adding to Tuesday’s gains just below the 0.89 handle after meeting strong support in the vicinity of the 200-day SMA around 0.8840.

Later in Euroland, final inflation figures tracked by the CPI for the month of August are expected to meet the preliminary readings at 1.0% YoY and 0.2% MoM.

On the Brexit front, nothing auspicious came out from the earlier speech by J.C.Juncker before the European Parliament, who stressed that there was ‘very little time remaining’, adding that the risk of a ‘hard Brexit’ scenario is palpable, all weighing further on the British Pound.

EUR/GBP key levels

The cross is gaining 0.20% at 0.8875 and faces the next hurdle at 0.8943 (100-day SMA) followed by 0.9047 (55-day SMA) and then 0.9148 (monthly high Sep.3). On the downside, a breach of 0.8838 (monthly low Sep.17) would expose 0.8807 (61.8% Fibo of the May-August rally) and finally 0.8667 (78.6% Fibo of the May-August rally).