EUR/GBP flirting with lows near 0.91 handle post UK data, EZ CPI next

The EUR/GBP cross witnessed a corrective slide from yearly tops and held weaker near the 0.9100 handle following the release of UK macro data.

The spot had a muted reaction to the UK data that showed monthly retail sales posted the second consecutive month of growth of 0.3% in July. The disappointment, however, came from yearly rate, coming-in at 1.3% as compared to 1.4% growth expected and previous month's strong 2.8% growth (revised a bit lower from 2.9% reported earlier). 

   •  UK July retail sales arrive at 0.3% m/m vs 0.2% expected

Meanwhile, core retail sales (excluding fuel) bettered expectations and recorded a growth of 0.5% and 1.5%, on a monthly and yearly basis, respectively. With markets looking past yesterday's stellar UK employment details, today's mixed results did little to attract any strong GBP buying interest and helped the cross to defend the 0.9100 handle, at least for the time being.

Next on tap would be the release of final Euro-zone CPI print for July, trade balance data and ECB Monetary Policy Meeting Accounts. The key focus would remain on the ECB minutes, where clues over a possible tapering in September would trigger some volatility across the EUR pairs. 

   •  Eurozone: Focus on ECB minutes – TDS

Technical levels to watch

On a sustained weakness below the 0.9100-0.9090 region, the cross is likely to extend the corrective slide towards mid-0.9000s before eventually dropping to test the 0.90 psychological mark. On the upside, 0.9125 level now seems to have emerged as immediate strong resistance, above which the cross is likely to make an attempt towards conquering the 0.9200 handle, with some intermediate resistance near 0.9175-80 area.