- EUR/GBP moves higher near the 0.8980 region.
- GBP-selling gives wings to the cross.
- UK manufacturing PMI dropped to 48.0 in June.
The increasing selling pressure surrounding the Sterling is helping EUR/GBP to move to the vicinity of 0.8980/90, at shouting distance from the psychological 0.9000 handle.
EUR/GBP propped up by GBP-weakness
The British Pound has started the week on a negative note and this has propelled the European cross to levels closer to the critical 0.9000 yardstick, challenging at the same time 6-moth peaks.
On the always-uncertain Brexit front, both candidates to succeed Theresa May at Number 10 keep the ‘no deal’ scenario well on the cards, although Jeremy Hunt said earlier on BBC that he will decide in late September if there is still the ‘realistic chance’ of clinching a deal with the EU.
The selling bias around Sterling has picked up extra pace today after UK’s manufacturing PMI dropped further into the contraction territory during June (48.0). Further additional data also came in on the weak side, with BoE’s Consumer Credit shrinking to £0.822 billion during May, Mortgage Approvals went down to 65.41K and M4 Money Supply contracted at a monthly 0.1% during the same period.
What to look for around GBP
Rising uncertainty in the UK political scenario is expected to keep the cautious/bearish stance intact around the Sterling, while bouts of USD-selling remains the sole driver behind sporadic bullish attempts in Cable. In the UK economy, mixed-to-poor results from fundamentals continue to add to the sour prospects for the economy in the months to come. On another direction, the overall tone from the BoE appears to have shifted towards a more neutral (dovish?) gear, while uncertainty around Brexit is seen as the main obstacle in determining the next move on rates.
EUR/GBP key levels
The cross is gaining 0.26% at 0.8974 and a break above 0.8992 (monthly high Jun.17) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the other hand, the next down barrier aligns at 0.8912 (21-day SMA) seconded by 0.8872 (low Jun.20) and then 0.8826 (low Jun.5).
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