German Economic Sentiment remains Sluggish but EUR/GBP Appears Bullish

United Kingdom – Consumer Price Index (CPI)

Tomorrow, at GMT 8:30 a.m., the UK’s Office for National Statistics will release the year-over-year Consumer Price Index  (CPI) figure, which measures the changes in the price of products and services bought by consumers in the country.

Since the CPI comprise of mostly consumer goods, a higher CPI indicates rising consumer prices that account for the bulk of the overall national inflation. Hence, Binary options investors consider the CPI to be a leading indicator of the economy as higher inflation would motivate the central bank to increase interest rates in the future.

Last month, the UK’s Consumer Price Index (y/y) figure remained neutral at 0.0%, and this month, the forecast is once again set at a 0.0% increase.

Eurozone – German ZEW Economic Sentiment

Later, at GMT 9:00 a.m., the Zentrum fur Europaische Wirtschaftsforschung (ZEW) will release its German economic sentiment index, which measures the level of a diffusion index based on surveying 275 German institutional investors and market analysts.

Since the professional investment community, investors and analysts have the latest data; their reflection about the economy tends to be the most accurate. Therefore, binary options traders consider the ZEW’s German economic sentiment index to be a leading indicator of the entire Eurozone economy. This is because the German economy is one the most important driving forces behind the Euro currency.

Last month, the ZEW German economic sentiment came out at 12.1, and this month the forecast is set at a very pessimistic level, at 6.8.

Trade Recommendation for the EUR/GBP

EURGBPDaily

Although the EUR/GBP remained in a modest uptrend over the last several weeks, it found strong resistance around the 0.7400 level several times already.

As the German ZEW economic sentiment is expected to go much further down over the last month. Also, the UK’s consumer inflation data (CPI) would likely remain unchanged. Hence, the overall market sentiment for the EUR/GBP would likely remain bearish this week.

However, the last Friday, the EUR/GBP formed a large bullish bar after the price found strong support around the 0.7335 area three days in a row. From a technical point of view, it suggests an upcoming bullish move in the EUR/GBP.

If the German ZEW economic sentiment comes better than expected, the market may indeed move higher.

Under the circumstances, it would be recommended that traders consider placing a CALL order for the EUR/GBP with their US binary options brokers, once the price closes above the 0.7445 level.

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