EUR/GBP Price Analysis: Downbeat UK Retails Sales opens doors for further upside

• EUR/GBP has advanced to 0.8740 amid downbeat UK Retail Sales data.
• A negative divergence formation has bolstered signs of a bullish reversal.
• The cross is overlapping with the 200-EMA at around 0.8715.

The EUR/GBP pair has picked significant bids and has accelerated to near 0.8740 as the UK Office for National Statistics has reported downbeat Retail Sales data. The annual Retail Sales have declined by 6.9%, against the expectations of a 5.0% decline and the prior release of -5.4%. While the monthly retail sales figure remained negative by 1.4% vs. the projections of a 0.5% decline.

Meanwhile, public Sector Net Borrowings have remained marginally lower at GBP 19.248B vs. the estimate of GBP 19.325B.

On an hourly scale, the asset has displayed a rebound after a bullish negative divergence formation. It is worth noting that the asset was continuously making lower lows while the momentum oscillator, Relative Strength Index (RSI) (14) made a higher low. This indicates a loss in the downside momentum. Also, the momentum oscillator has shifted into the 40.00-60.00 range.

The cross is overlapping with the 200-Exponential Moving Average (EMA) at around 0.8715, which signals a consolidation ahead.

Going forward, a break above the upward-sloping trendline from October 4 low at 0.8649 will drive the asset towards the round-level hurdle of 0.8900, followed by September 29 high at 0.8980.

On the contrary, a drop below Monday’s low at 0.8578 will drag the asset toward August 19 high at 0.8511. A slippage below the latter will expose the cross to August 19 low at 0.8449.

EUR/GBP hourly chart