EUR/GBP digests UK jobs data, weighs in on German ZEW economic sentiment numbers

EUR/GBP rose for a third straight session yesterday after data showed the UK economy unexpectedly contracted for a second consecutive month.

Today, the pair held firm after UK jobs data showed the unemployment level unexpectedly rose to 3.8% from 3.7%.

The number of claimants fell -19.7k lower than expected, the -42.5k expected. Meanwhile, wages rose 6.8%, down slightly from 7% in March, but remain elevated, underscoring the challenge facing the BoE at its meeting on Thursday.

Meanwhile, Germany’s CPI was revised up to 0.9% MoM from 0.8%. The ECB announced that it would raise interest rates at the July meeting.

Looking ahead, German ZEW Economic Sentiment data is expected to show an improvement to -27.5 from 34.3. If true, it will mark the third straight month of improved economic sentiment.

What future for EUR/GBP?

EURGBP made several attempts to break above 0.86. The pair continues to trade above its 20 and 50 sma, the RSI also supports further upside. However, buyers need to break above 0.86 to extend the uptrend towards 0.8620 2022 high.

On the downside, support can be seen at 0.8530 at yesterday’s low and 0.8525 at the 20 moving average. It would take a move below 0.8490 to create a lower low.

Gold stabilizes after a sell-off

Gold lost more than 3% yesterday on fears of a more hawkish Federal Reserve. After Friday’s unexpected ruse in US inflation, the market began to price in a 75 basis point rate hike in June, which sent US equities into a bear market, the USD jumped higher on the safe-haven flows, pulling gold prices lower.

According to the Fed’s CME watchdog, a 75 basis point rate hike was fully priced in for the June meeting, up from 4% a week earlier.

Today, Gold is marginally higher as Treasury yields retreat and focus shifts to US PPI data which is expected to show a slight decline to 10.9% YoY from 11 %. Stronger than expected inflation could pull gold down.

What’s next for gold prices?

Gold prices failed at uptrend line resistance and the 50 sma and fell lower breaking below the 20 sma before finding support at 1810. RSI remains below 50 supporting a further decline.

Any recovery will first look to attack resistance at 1830 before the 20 SMA at 1848 and trendline upside resistance at 1880.