Softer consumer inflation figures from France and Germany weigh on the shared currency.cross prolongs its bearish trend for the fourth successive day and drops to a fresh YTD low during the first half of trading on Wednesday. Spot prices, however, manage to rebound a few pips during the European session and currently trade around the 0.8635 region, down 0.15% for the day.
The shared currency drifts lower on the back of softer consumer inflation figures from the Eurozone's two largest economies - Germany and France - and turns out to be a key factor weighing on the EUR/GBP cross. In fact, the headline German CPI missed consensus estimates and decelerated to the 6.1% YoY rate in May from 7.2% in the previous month. Earlier the French CPI also surprised to the downside and fell 0.
In contrast, investors remain anxious over the possibility of additional interest rate hikes by the Bank of England , bolstered by stronger-than-expected consumer inflation figures released last week. This further contributes to the British Pound's relative outperformance against its European counterpart and is seen as another factor dragging the EUR/GBP cross lower.
Even from a technical perspective, the Relative Strength Index on the daily chart has moved on the verge of breaking into the oversold territory. This further makes it prudent to wait for some near-term consolidation or a modest bounce before positioning for any further near-term depreciating move.