- EUR/GBP regains ground lost and clinches the mid-0.8900s.
- UK Construction PMI plummeted to 43.1 in June.
- B.Johnson and J.Hunt will visit Northern Ireland.
The increasing selling bias around the British Pound is lifting EUR/GBP to fresh daily highs in the 0.8950 region.
EUR/GBP still trades below 0.9000
The European cross has accelerated the squeeze higher after breaking above both the 200-hour SMA and the 100-hour SMA, although a test/surpass of the psychological 0.9000 mark still remains elusive.
GBP is also deriving extra weakness after the UK Construction PMI dropped to 43.1 for the month of June, recording the lowest level sin April 2009. Previously, house prices tracked by the Nationwide HPI rose 0.1% MoM in June and 0.5% from a year earlier. Closer to home, German Retail Sales contracted 0.6% MoM in May vs. a 0.5% expansion forecasted. Further data saw Producer Prices in the broader euro area expanding at an annualized 1.6% during the same period (from April’s 2.6% raise).
On the Brexit front, candidates Boris Johnson and Jeremy Hunt will land in Northern Ireland in order to search deals with party members and expose their proposals over the Irish border.
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 0.34% at 0.8957 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 0.8914 (21-day SMA) seconded by 0.8872 (low Jun.20) and then 0.8826 (low Jun.5).
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