- The cross extends the up move near the 0.87 handle.
- The selling mood around the Sterling collaborates with the upside.
- May’s Brexit negotiator O.Robbins travels to Brussels.
The selling bias prevails around the British Pound so far today and is now helping EUR/GBP to record new 2-month peaks in levels just shy of 0.8700 the figure.
EUR/GBP tests the 100-day SMA
The European cross is posting gains for the seventh session in a row so far on Tuesday, running out of steam just ahead of the key 100-day SMA at 0.8696 and the critical 0.8700 milestone.
In the meantime, US-China trade dispute remain in centre stage after China announced retaliatory measures to counteract US fresh wave of tariffs.
On the Brexit front, PM Theresa May’s Brexit negotiator O.Robbins will meet his EU peers in Brussels amidst ongoing – albeit unproductive – cross-party talks.
Data wise today, the UK Claimant Count Change rose by 24.7K in April and Average Earnings +Bonus expanded at an annualized 3.2%, all prints coming in below consensus. The bright note, however, came in from the jobless rate, which ticked lower to 3.8% during March.
In Euroland, Economic Sentiment in the euro bloc and Germany disappointed estimates for the month of May, while Industrial Production in the broader euro zone contracted 0.6% on a year to March.
What to look for around GBP
Market participants have shifted their focus to the resumption of cross-party talks between the government and the opposition, although there is no significant progress yet. Recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ increase in the sector. In addition, the current steady stance from the Bank of England appears justified by below-target inflation figures, mixed results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to already rising speculations of a ‘no-hike’ this year.
EUR/GBP key levels
The cross is gaining 0.12% at 0.8670 and a breakout of 0.8691 (high May 14) would expose 0.8722 (high Mar.21) and finally 0.8795 (200-day SMA). On the downside, immediate contention aligns at 0.8620 (21-day SMA) followed by 0.8595 (55-day SMA) and then 0.8488 (low May 6).
Share
