50% of move down from Sep 3 high stalls rally

The EURGBP was pushed higher today on the back of weaker UK CPI data. The price extended to 0.7492 - just short of the 50% retracement of the move down from the September 10 consolidation high to the July 17, 2015 low. That level comes in at 0.74991 (see daily chart below).

The pair has since dipped toward the 38.2% of the move up today at the 0.74539 level (see 5 minute chart below). The buyers remain in control. Having said that , there is an earlier ceiling resistance area against the 0.7474 level (see 1, 2, 3 blue circles in the chart below) AND the pair may be setting up for a head and shoulder formation on the 5- minute chart below. Be aware. A break of the neckline and the 38.2% at the 0.74539, may solicit more selling.

Tomorrow, the UK employment report will be released. Focus will be on the wages which are around the 3% level for with and without bonuses included (est. is 3.1% with and 3.0% without bonuses). The CPI was weaker today, but if wages stay elevated, fear of other measures of inflation following will be the new story. This should put the pressure back on the EURGBP.