• EUR/GBP retreats from intraday high during six-day downtrend.
• German Industrial Production YoY for February arrives better than expected and prior.
• Brexit optimism, comparatively upbeat UK data and hawkish BoE talks previously teased bears.
• ECB policymakers keep advocating further rate hikes even as recession fears loom.

EUR/GBP fails to cheer upbeat German data for long during early Thursday as it reverses from the intraday top to around 0.8745 by the press time. In doing so, the cross-currency pair drops for the sixth consecutive day and remains on the way to posting the second consecutive weekly loss as traders brace for the holidays in the bloc.

Germany’s Industrial Production (IP) rose 0.6% YoY in February versus -2.7% market forecasts and -1.6% previous readings. The monthly figures also came in firmer than 0.1% expected, to 2.0% versus 3.7% prior.

Today’s German data traces the previous day’s mostly upbeat figures for the European powerhouse, as well as for the old continent, and allow the Euro buyers to cheer the recently hawkish comments from the European Central Bank (ECB) officials. However, the broad risk-off mood and recession fears underpin the US Dollar’s demand and weigh on the shared currency.

On Wednesday, Germany Factory Orders improved to -5.7% YoY for February from -12.0 revised down prior and -10.5% market forecasts while the MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings. It’s worth noting that Germany’s final readings of S&P GlobalBME Composite PMI for March confirmed 52.6 initial estimations while Services PMI eased to 53.7 versus 53.9 flash forecasts. On a broader front, Eurozone S&P Global Composite PMI eased to 53.7 in March versus 54.1 first readings whereas Services PMI also declined to 55.0 during the stated month from 55.6 preliminary forecasts.

Following the data, ECB policymaker Boris Vujčić said on Wednesday, “The largest part of the rate-hiking cycle is behind us.” The ECB official also added that “to address core inflation, we might need to raise rates further.”

It’s worth noting, however, that the Brexit optimism and the UK’s mixed PMIs seem to challenge the EUR/GBP buyers.

The UK’s final readings of S&P Global/CIPS Composite and Services PMIs for March came in mixed as the former confirmed the initial estimations of 52.2 but the key Services gauge improved to 52.9 from 52.8 initial forecasts.

Talking about Brexit, “A new model will be announced later on Wednesday to ‘reduce the need for checks for many types of goods,’” said Sky News while citing an anonymous UK Cabinet Office source speaking on the post-Brexit checks on goods coming to the UK from the European Union (EU).

Moving on, second-tier Eurozone data can entertain EUR/GBP pair traders ahead of a Good Friday break. With this, the cross-currency pair may witness further consolidation of previous losses but the bulls need strong reasons to return.

Technical analysis

Despite the latest rebound, EUR/GBP buyers need to cross a three-week-old previous support line, now immediate resistance near 0.8770, to retake control. Until then, the bears appear to keep the reins and aim for the 11-week-old horizontal support area surrounding 0.8720.