EUR/GBP rally stalls at 0.8660 with Eurozone's economic outlook weighing
- The Euro hesitates at 0.8660 as concerns about the eurozone economy grow.
- Weak Construction data and fears of a recession in Germany are weighing on the pair.
- Softer than expected UK CPI data is holding down the Sterling.
The Euro recovery from last week's lows has been halted at the 0.8660 area on Wednesday´s European morning session with the common currency weighed by mounting concerns about the Region's economy.
Earlier today, Eurostat released that Eurozone Construction Output contracted by 1% in October. These figures come after the downbeat IFO business sentiment index seen on Monday and last week’s contracting Services and Manufacturing PMIs.
In this context the Federation of German Industries (BDI) has warned that the German economy is heading for recession, increasing negative pressure on the Euro.
In the UK, Consumer inflation data released earlier on Wednesday has shown a larger-than-expected decline in November. This eases pressure on the BoE to keep hiking rates and is limiting Sterling´s recovery.
EUR/GBP Technical analysis
The technical picture shows the pair hesitating right below the 50% Fibonacci retracement of the late November - early December sell-off, with the near-term positive bias still intact.
Immediate support lies at 0.8630/40, which closes the path towards 0.8600 and the December 11 low at 0.8550. Above 0.8660, the next targets are 0.8690 and 0.8725.