EUR/GBP edges lower past 0.8600 after two-day losing streak, PMIs eyed

• EUR/GBP remains pressured, mostly inactive, after two-day downtrend amid sluggish markets.
• Trader’s wait for Eurozone/UK PMIs for June also restrict immediate EUR/GBP moves.
• Mixed EU data raise doubts on hawkish ECB talks but fears of UK recession prod EUR/GBP bulls.
• Hoes of easing British employment crunch, challenges for ECB rate hikes keep sellers hopeful.

EUR/GBP holds lower grounds near 0.8590 as it struggles for clear directions but the bears refrain from relinquishing control heading into Monday’s European session. In doing so, the cross-currency pair justifies a recently upbeat headline from the UK amid fears that the European Central Bank (ECB) has multiple challenges to defend the hawkish bias.

The UK Times came out with the news suggesting British Health Secretary Steve Barclay’s willingness to give doctors a bigger pay rise, calling for an end to consultant strikes to resume negotiations. “Barclay’s admission came as the head of the NHS (National Health Services) warned that the disruption to routine healthcare would become “more significant” this month,” said the news. It should be noted that the UK’s employment report appeared mixed and signaled an easing of the British labor crunch.

Elsewhere, the preliminary readings of Germany’s inflation per the Consumer Price Index (CPI) rose to 6.4% YoY in June from 6.1% in May and 6.3% expected. On the same line, the European Central Bank’s (ECB) favorite inflation gauge, namely the Harmonised Index of Consumer Prices (HICP), also jumped to 6.8% on a yearly basis from 6.3% prior and 6.7% market forecasts. Further, the preliminary Eurozone HICP inflation number rose to 0.3% MoM versus 0.0% expected and prior while the yearly figures eased to 5.5% from 5.6% market forecasts and 6.1% previous readings.

It’s worth noting that the European Central Bank (ECB) officials tried defending their rate hike bias but softer inflation data and looming fears of Germany’s recession restrict markets from believing in them, which in turn weigh on the EUR/GBP Price. Alternatively, the UK inflation numbers and the Bank of England (BoE) policymakers’ hawkish bias put a floor under the pair’s price.

Moving on, final readings of the June month PMIs from the Eurozone and the UK will be important to watch for clear directions of the EUR/GBP pair. Also important to watch are the central bankers’ comments and risk catalysts.

Technical analysis

EUR/GBP extends pullback from the 50-day Exponential Moving Average (EMA), around 0.8645 by the press time, towards a fortnight-old rising support line near 0.8565. That said, the cross-currency pair’s further downside appears less impressive.