The upside potential of the euro, which was formed at the beginning of the European session on Wednesday, was limited by rather controversial data on consumer price inflation in the euro area. Although it showed annual growth, it coincided with the forecast of economists. Despite this, growth after a two-month drop is clearly a good sign.

The apparent slowdown in the euro zone economy in the first quarter of this year was offset by excellent labor market performance that could negatively affect the further growth of consumer prices. It will affect the plans of the European Central Bank to curtail the bond redemption program, which was scheduled in autumn of the year.

However, given the fact that the data is still preliminary, we can expect a better final figure after a new wave of labor market growth in the euro area.

According to the EU statistical agency Eurostat, the annual consumer price index in March 2018 increased by 1.4% compared to the same period of the previous year after rising by 1.1% in February. The data is fully coincided with the forecasts of economists.

Still, the decisive role in the index continues to play fluctuations in energy prices, due to which consumer prices may rise by the summer of this year. This is indicated by the data on the basic indicator of inflation, which does not take into account volatile prices for energy and food. According to the report, core inflation did not change in March this year, amounting to 1.0%.

As for the technical picture of the EUR/USD pair, it did not change relative to the morning forecast. The attempt of morning growth failed, and so far everything is on the side of the sellers of the European currency. The movement tends to the lower border of the descending channel, which now coincides with the support level and the new monthly minimum of 1.2240. In case of its breakthrough, we can expect a larger downward trend in the trading instrument, with an upgrade to the area of 1.2195 and 1.2150.

The British pound in the first half of the day also reacted negatively to data on activity in the construction sector, which in March fell after five months of growth. According to the IHS Markit report, the purchasing managers' index for the construction sector fell to 47.0 in March from 51.4 in February. Let me remind you that the index values above 50 indicate an increase in activity.

Most recently, the outlook expressed that the European Central Bank will not make concessions to the UK on Brexit and it will not retain preferential treatment in trade operations until the end of the transition period, ending in 2020. If these rumors are confirmed, UK companies may find themselves at a very disadvantageous position, especially those that are outside the country. As noted in the HIS report, the decline in production in the construction sector will most likely continue.