EUR/GBP Price Analysis: Fades weekly rebound near 0.8550 ahead of UK inflation

• EUR/GBP eases from weekly top, edges higher of late.
• Sustained bounce off 61.8% Fibonacci retracement, break of 200-SMA favor buyers.
• UK CPI may arrive firmer for August, backing BOE tapering concerns and the GBP bulls.

EUR/GBP struggles to extend recovery moves around 0.8550 during Wednesday’s Asian session. In doing so, the cross-currency pair steps back from the 38.2% Fibonacci retracement (Fibo.) level of August-September upside.

Given the steady RSI and a pullback from the short-term key Fibo. level, EUR/GBP may retest the 200-SMA level surrounding 0.8540.

However, any further downside past 0.8540 remains doubtful as to the 61.8% Fibonacci retracement near 0.8510 and the 0.8500 threshold challenges the bears afterward.

Meanwhile, an upside clearance of 38.2% Fibo near 0.8550 will direct EUR/GBP buyers to a three-week-old horizontal resistance near 0.8565.

Also acting as an additional upside filter is the 23.6% Fibonacci retracement around 0.8575 and the monthly peak of 0.8613.

To sum up, EUR/GBP consolidates recent gains but the bears need confirmation to step in. Also, today’s UK CPI data will be important to watch given the latest chatters over the winding up of the Quantitative Easing (QE) by the BOE’s Husher, also previously backed by the other policymakers. That said, the headline CPI is likely to jump from 2.0% to 2.9% YoY.

EUR/GBP: Four-hour chart

Trend: Further upside expected