“¢ Renewed Brexit optimism helped GBP to regain positive traction.
“¢ GBP bulls further cheer upbeat UK average weekly earnings data.
The EUR/GBP cross weakened farther below the 0.8800 handle and has now filled the weekly bullish gap post-UK employment details.
The cross extended overnight retracement slide from over one-week tops, levels beyond the 0.8800 handle, and kept losing ground through the early European session on Tuesday amid some renewed Brexit optimism.
Investors looked past weekend’s Brexit setback, wherein the UK and EU failed to find a compromise to resolve differences over avoiding a physical border in Ireland, and seemed to take cues from German European Union Minister Michael Roth’s comments, indicating possibilities of a Brexit deal.
Adding to this, a senior EU official was further noted saying that preparing for no-deal must not stop us trying to reach the best possible Brexit deal. This coupled with better-than-expected UK average weekly earnings data provided a minor lift to the British Pound and further collaborated to the pair’s slide.
According to the latest UK labour market details, average earnings excluding, and including bonus recorded a strong growth of 3.1% q/y into August, and 2.7% respectively. Meanwhile, the number of people claiming unemployment-related benefits jumped by 18.5K as compared to 10.0K anticipated but did little to offset the positive wage growth figures.
With today’s key UK macro data out of the way, any fresh Brexit-related news/developments might continue to influence the GBP price dynamics and produce some meaningful short-term trading opportunities.
Technical levels to watch
Immediate support is pegged near 0.8760 level, below which the pair is likely to accelerate the fall towards 0.8725-20 horizontal zone en-route the 0.8700 handle. On the flip side, the 0.8800 handle now becomes immediate resistance, which is followed by the very important 200-day SMA, currently near the 0.8830-35 region.
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