EUR/GBP returns to 0.8700 in a choppy trading session

• The Euro bounces up at 0.8660 to test resistance at 0.8700,
• The Pound is losing ground across the board on a light trading session.
• EUR/GBP maintains its bullish trend from early December lows. 

The Euro bounced up again at 0.8660 to return to levels near 0.8700, approaching a one-month high, at 0.8715. The pair is capitalizing on a recent GBP weakness in the last trading session of the year.

In the UK, housing prices remained flat in December, as expected, following a 0.2% increase on the previous month. Year on year, prices declined at a 1.8% pace, bearing expectations of a 1.4% decline and following a 2% depreciation in October.

In the Euro Area, preliminary data revealed that consumer prices remained flat in Spain in December, and grew at a 3.3% level on the year, unchanged from the previous month. This proves that inflationary pressures remain high in some countries and backs the “higher for longer” ECB stance.

The technical picture shows bulls in control, with the pair printing higher highs and higher lows since early December. The pair, however, would need to confirm above the 0.8700 level to increase bullish pressure towards the November 22 and 23 highs, at 0.8725, and November’s peak, at 0.8765.

On the downside, support levels are 0.8645 and 0.8600.

Technical levels to watch