EUR/GBP consolidates downside ahead of FOMC

• EUR/GBP bears rest up ahead of FOMC.
• EUR/GBP capped at 0.8840/50.

EUR/GBP is consolidating the downside ahead of the FOMC outcome at the top of the hour. Currently, EUR/GBP is trading at 0.8753, down -0.14% on the day, having posted a daily high at 0.8818 and low at 0.8746.

Hawkish talk from BoE Gov Carney overnight helped the pound rally and took the cross down from 0.8831 before a month-end recovery came in at 0.8759 with core euro zone inflation rising to 1.2% yy from 1.1% and vs f/c 1.0%. Also, German jobless rate dropped to a new record low at 5.5% but retail sales plunging to 1.9% in December compared a 2.8% f/c stalled the recovery progress.

US data ahead of FOMC

Ahead of the FOMC, US data was stronger than expected in the January ADP report. This arrived at 235k, implying robust private sector jobs growth. "It may lead to upward tweaks to expectations for the upcoming non-farm payrolls report (currently 180k)," explained analysts at ANZ

EUR/GBP levels

Analysts at Commerzbank explained that EUR/GBP has faltered as expected just ahead of 0.8840/50, the 55 and 200 day moving averages and the 0.8875 5 month resistance line:

 "While capped here a negative bias will remain and we should retest the 0.8687/89 recent lows. Were a slip below the December and January lows at 0.8689/87 to be seen, the June low at 0.8651 would be in focus."