- EUR/GBP has slowed down of its pursuit tot he upside, targetting 55-DMA and instead, Breit headlines have firmed up sterling’s case for the upside.
- Tusk announces EU’s agreement to delay Brexit Atrile 50 until 31st Oct.
EUR/GBP is currently trading at 0.8611, having traded in a tight range between 0.8591 and a high of 0.8617. There had been some key growth and manufacturing data from the UK overnight that was sterling supportive with additional figures coming from the Office for National Statistics provided a welcome distraction showing that the UK economy grew more than expected in February despite Brexit uncertainty – Gross domestic product grew by 0.2% on the month in February, slowing down from 0.5% growth the month before but coming in ahead of expectations for a flat reading – (In the three months to February, GDP was up 0.3%, in line with the previous period abut beating the 0.2% growth pencilled in by analysts).
In more recent trade, however, the focus was on Brexit:
- Tusk said EU agree on extension – 31st Oct
Meanwhile, the ECB looks set to ease if need be, following the ECB meeting overnight.
Analysts at Westpac explained that today’s ECB meeting was, however uneventful:
“The Bank left interest rates steady, repeated that rates will remain unchanged at least through to end-2019 and gave few details about the terms of the recently announced TLRTO3 bank liquidity offering (due to start later this year). President Draghi stuck to a cautious tone on the economy, noting that the risks remain tilted to the downside and the persistence of uncertainties. The ECB confirmed that they were looking into “mitigating” the side effects of negative rates, though no details were provided; banks currently pay a flat 40bp penalty on excess reserves deposited at the ECB. They are exploring the possibility of applying a tiered negative rate that would only apply on reserves above a certain amount.”
EUR/GBP levels
Analysts at Commerzbank explained that EUR/GBP was en route to the 55 day ma, and mid-point of the 0.86 handle:
“A close above here would allow for a test of the recent high at 0.8723 and 0.8828 (200-day ma). It continues to hold the 0.8471 recent low and we suspect might be trying to base near term. Currently, though we remain unable to rule out the risk of a slide to the 200-week ma at 0.8411 (this is less favoured).”
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