EUR managed to gain momentum over GBP recently after the dominant bearish trend established by GBP. Earlier this week, the pair entered a consolidation phase between the 0.8500-0.8650 area.

The ECB left the key policy rate unchanged at a record low of 0.0% along with the deposit rate. The ECB stated at its last policy meeting that they don't have any plan to increase the policy rate at least until late 2019. The main focus for the ECB would be to ensure the sustained consumer inflation to the levels that are below, but close to 2% over the medium term. Inflation rates are drifting towards the official target level. The euro area's real GDP rose by 0.2% in the fourth quarter of 2018, following an increase of 0.1% in Q3.

The manufacturing sector remains feeble due to soft external demand. An annual HICP inflation edged down to 1.4% in March 2019 from 1.5% in February because of a decline in prices of food, services, and non-energy industrial goods. Broad money growth improved by 4.3% in February 2019 from 3.8% in January. The annual growth rate of loans to non-financial corporations recovered to 3.7% in February 2019 from 3.4% in January. Overall, the European economy in on a recovery mode. Moreover, Brexit tensions also calmed down for a few months.

On the other hand, the UK is in the grips of political gridlock without prospects of easing. Theresa May's government failed to agree on the Brexit option. The EU leaders granted the UK a 6-month extension until October 31. The UK is looking forward for a new Governor of the Bank of England to succeed Mark Carney who is to leave the office by January 2020. Recently UK Average Earning Index was published unchanged as expected at 3.5%, an Unemployment Rate remained flat at 3.9%, and Claimant Count Change showed a negative result increasing to 28.3k from the previous figure of 26.7k which was expected to decrease to 17.3k. Moreover, UK Retail Sales unexpectedly surged to 1.1% in March from -0.6% in February which was expected to be at 0.2%.

To sum it up, GBP is firmer than EUR amid the ongoing economic backdrop.

Now let us look at the technical view. The price is currently trading the edge of 0.8650 area with fading bullish momentum which indicates further bearish pressure in the coming days. The price is currently forming Bearish Continuous Divergence which is expected to lead to further downward pressure with a target towards 0.8500 area in the coming days.