If we are to analyze the macroeconomic fundamentals, the most important issue may be the problems of the EUR. The March PMI for industry confirmed the second consecutive fall in the pace of new orders to the lowest level since November 2016. This may be one of the first signs that the global recovery in 2018 may not be as strong as at the beginning of the year it seemed, or at least the Eurozone is starting to stand out negatively. Moreover, today's Core CPI Flash Estimate data were worse than expected (1.0% vs. 1.1% expected) and the CPI Flash Estimate was in line with anticipations (1.4% vs. 1.4% expected). This makes the EUR more sensitive to the downside. Last week, values from Germany fell lower, which already fueled speculation about the ECB's weakening potential for normalization. The biggest threat to the EUR is the overhang of long speculative positions that have not worked for some time and investors' frustration may break the rate, and worse data may serve as a catalyst for yet another leg down.
Let's now take a look at the EUR/GBP technical picture at the H4 time frame. The market is still locked in a narrow horizontal consolidation zone between the levels of 0.8688 - 0.8792, but the weak momentum indicator, which is still below its fifty level, indicates a possible move down towards the level of 0.8648 in the near future. If this level is broken, then the next technical support is seen at the level of 0.8505.
