• EUR/GBP bulls take a breather at weekly top after rising the most in fortnight the previous day.
• Market’s reassessment of mixed Eurozone, German data joins UK recession woes to prod buyers.
• BoE is expected to ease on rate hikes as inflation woes recede, 0.25% lift in benchmark rates loom on Thursday.
• ECB’s dovish hike may prod pair buyers even if the BoE tames the hawks.

EUR/GBP struggles to remain firmer around the 0.8600 round figure heading into Wednesday’s London open. That said, the cross-currency pair ignored mixed Eurozone data while justifying the UK’s economic fears to post the biggest daily jump in two weeks the previous day.

That said, the last week’s downbeat prints of the UK’s inflation data allow the Bank of England (BoE) hawks as they struggle to tame the heavy inflation amid downbeat economic activities and workforce problems at home. Also challenging the British Pound (GBP) is the latest disappointment for the ruling Tory Party, as Rishi Sunak’s team lost some of the key seats in the by-elections.

On the other hand, the German Unemployment Rate eased to 5.6% for June versus 5.7% expected and prior whereas the final prints of HCOB Manufacturing PMI for July confirmed a 38.8 figure. On the same line, the last readings of Eurozone HCOB Manufacturing also matched initial forecasts of 42.7.

It should be noted that the European Central Bank’s (ECB) “meeting-by-meeting” approach while announcing a 0.25% rate hike in the last week prod the EUR/GBP bulls.

Above all, the market’s cautious mood ahead of the BoE Monetary Policy Meeting, up for release on Thursday, challenges the pair traders amid mixed feelings even if the UK central bank is likely to announce a 0.25% rate hike. In a case where the “Old Lady”, as the BoE is casually termed, pauses the rate increase or sounds dovish, the EUR/GBP will have further upside to trace.

Technical analysis

Although a clear upside break of 50-DMA, around 0.8590 by the press time, keeps the EUR/GBP buyers hopeful, a downward-sloping resistance line from late April, close to .8630 at the latest, challenges the bulls before giving them control.