The euro was suddenly rattled by dismal services and manufacturing numbers of the biggest economy in the Eurozone, prompting a downturn on the EURGBP. To learn more about the broader market sentiment on the single currency, check out our latest EURUSD analysis.
The Markit institute posted the September manufacturing and services PMI numbers of Germany earlier today. The findings of the survey revealed that Germany's industrial output contracted much more than initially forecasted. This prompted an immediate depreciation of the EURGBP as the euro weakened.
The resulting selloff drove the price action of the EURGBP back below the upper boundary of the pair's consolidation range, which has been prevalent over the last couple of weeks.
The upper limit of the range is underpinned by the 61.8 per cent Fibonacci retracement level at 0.85853. This sudden upsurge in selling pressure was promptly registered by the MACD indicator as the histogram turned negative.
The reversal also led to a breakdown below the 20-day MA (in red). Now, the price action looks set to test the strength of the 50-day MA (in green) and the 100-day MA (in blue). If it manages to break the two moving averages, the next target for the downswing would be 38.2 per cent Fibonacci at 0.85335.
German manufacturing increased by 58.5 index points in September, which still underscores industry growth. However, this happens at a much slower pace contrasted against the preliminary forecasts, which were forecasting an industry expansion of 60.3 index points. This would have been much closer to the 60.8 points that were recorded a month prior.
Meanwhile, the services sector increased by 56.0 index points, below consensus forecasts' 60.3 points and below the 60.8 index points that were observed in August.
This performance reflects the recent contraction in global consumption, which is subject to diminished consumer demand.
Expect the underlying volatility on the EURGBP pair to continue rising shortly on the latest monetary policy decision of the Bank of England.