EUR/GBP consolidates in a range around 0.8800, traders keenly await Eurozone CPI

• EUR/GBP moves away from a one-week high, though lacks any follow-through selling.
• Bets for more rate hikes by the BoE and the ECB hold back traders from placing bets.
• The focus remains glued to the release of the preliminary Eurozone inflation figures.

The EUR/GBP cross edges lower for the second successive day on Friday and retreats further from a one-week high, around the 0.8825-0.8830 region touched the previous day. Spot prices remain on the defensive through the early European session and currently trade around the 0.8800 round-figure mark, down less than 0.05% for the day.

The better-than-expected UK GDP print, showing that the economy expanded by 0.1% during the fourth quarter as compared to the original estimate for zero growth, boosts the British Pound and exerts some pressure on the EUR/GBP cross. The data comes on the back of the Bank of England (BoE) Governor Andrew Bailey's hawkish remarks earlier this week, saying that interest rates may have to move higher if there were signs of persistent inflationary pressure, and favours the GBP bulls.

The downside for the EUR/GBP cross, however, is more likely to remain cushioned amid bets for a further policy tightening by the European Central Bank (ECB). The expectations were reaffirmed by slightly higher-than-expected German consumer inflation data, which sparked speculation of a potential upside surprise in the Eurozone CPI, due later this Friday. This might hold back traders from placing aggressive bearish bets and act as a tailwind for spot prices, for the time being.

Even from a technical perspective, the EUR/GBP cross, so far, has been finding decent support near the 100-day Simple Moving Average (SMA). The recent price action, meanwhile, constitutes the formation of a descending triangle and favours bearish traders. That said, it will still be prudent to wait for acceptance below the 100-day SMA and a subsequent slide below the 0.8730 horizontal support before positioning for any meaningful depreciating move in the near term.

Technical levels to watch