The EUR/GBP and EUR/CHF exchange rates moved sideways after the latest European inflation data. The EUR/CHF price was trading at 0.9843 while the EUR/GBP pair was trading at 0.8790 as the focus shifts to the upcoming European Central Bank (ECB) decision.
European consumer inflation data
The most important EUR news on Tuesday was the flash consumer inflation data from the European Union. According to Eurostat, the headline consumer price index dropped from 0.9% in March to 0.7% in April. This decline was better than the median estimate of 0.9%.
Inflation jumped slightly on a year-on-year basis. It rose from 6.9% in March to 7.0% in April. Meanwhile, core inflation, which excludes the volatile food and energy prices declined from 1.3% to 1.0% on a MoM basis. It moved from 5.7% to 5.6% on a YoY basis.
Inflation rose in key countries. For example, the headline CPI in Italy rose to 8.3% while the harmonized inflation jumped to 8.8%. These numbers mean that inflation in the euro area is significantly higher than the ECB target of 2.0%.
These numbers mean that the European economy is still struggling. For example, data showed that the German retail sales droppped in March. Further numbers revealed that the manufacturing PMI contraction continued in April.
The next EUR/GBP and EUR/CHF news will be the upcoming European Central Bank (ECB) decision. Analysts expect that the bank will decide to hike interest rates by 0.25% and point to more hikes going forward. In a note, analysts at ING wrote:
“Sticky inflation data clearly stresses the need to continue hiking but with last week’s weaker-than-expected GDP growth report and today’s weak loan growth and loan demand data, the case for slowing down the pace and size of rate hikes has become stronger.”
EUR/GBP technical analysis
The four-hour chart shows that the EUR to GBP exchange rate has been in a consolidation phase in the past few days. It is trading at the key point at 0.8791, the lowest point on April 19. It has moved below the 25-day and 50-day exponential moving averages. Therefore, I suspect that the EUR/GBP pair will continue falling ahead and after the upcoming ECB decision.
EUR/CHF technical analysis
The 4H chart shows that the EUR/CHF exchange rate drifted upwards after the latest European inflation data. It moved slightly above the 25-period moving average, which is higher than last month’s low of 0.9777. The MACD has moved above the neutral point.
Therefore, the pair will likely continue rising as buyers target the key resistance point at 0.9926, the highest point on February 17.
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