EUR/GBP slides to 0.8550 despite downbeat UK employment, unimpressive German inflation data

• EUR/GBP reverses from daily top on firmer UK jobs report, downbeat German inflation figures.
• Final German inflation figures for June contrast with firmer British employment data to weigh on price.
• ECB policymakers appear comparatively more hawkish than their BoE counterparts, suggesting room for upside.
• German ZEW Survey data for July, central bank headlines eyed for fresh impulse.

EUR/GBP reverses from intraday high, refreshing the daily low near 0.8550 as a slew of UK/EU data released early Tuesday.

That said, the UK Claimant Count Change jumps by 25.7K for June versus -22.5K prior (revised) whereas the ILO Unemployment Rate rallies to 4.0% for three months to May compared to market expectations of witnessing no change in 3.8% prior figure.

Additionally, the final readings of Germany’s inflation for June, per the Consumer Price Index (CPI) and the Harmonized Index of Consumer Prices (HICP) measures match the initial forecasts of 6.4% and 6.8% respectively YoY figures.

Apart from the data, hawkish comments from the British policymakers, versus the mixed central bank talks and data from Eurozone also weigh on the cross-currency pair, especially after the firmer British employment figures.

On Monday, UK finance minister Jeremy Hunt spoke alongside Bank of England (BoE) Governor Andrew Bailey while showing readiness to take measures to return inflation to its 2% target.  It’s worth noting that the BoE Governor Bailey tried defending the restrictive monetary policy while pushing back concerns about the UK’s economic slowdown.

On the other hand, the Eurozone Sentix Investor Confidence declined to -22.5 for July from -17 in June. Adding to the pessimism were comments from Sentix managing director Manfred Huebner who said, “There is also nothing positive to report in terms of forward-looking expectations.”  Sentix’s Huebner also mentioned that the Investor Confidence Index for Germany fell 7.3 points to -28.4.

Talking about the European Central Bank (ECB) talks, Governing Council member Francois Villeroy de Galhau said, “Eurozone rates will soon reach their high point, but it will be more of a high plateau than a peak.” On the same line, Governing Council member and Bank of Portugal Governor, Mario Centeno, said that the inflation is coming down faster than the way up. The policymaker also added that they need to fuel this process and be very confident we can make it.

It should be noted that the market’s cautious mood also put a floor under the EUR/GBP prices considering the Euro’s (EUR) comparatively more market credence than the Pound Sterling (GBP).

Moving on, Germany’s ZEW sentiment survey for July and the central bankers’ comments will be eyed for clear directions.

Technical analysis

Although the 0.8520-15 region appears a tough nut to crack for the EUR/GBP bears, the pair’s recovery remains elusive unless crossing a downward-sloping resistance line from late April, close to 0.8615 as we write.