- EUR/GBP rebounds further from lows in sub-0.88 levels.
- UK Supreme Court expected to rule on Parliament suspension today.
- Focus shifted to PM B.Johson on potential corruption charges.
The selling bias around the Sterling is propping up the continuation of the recovery in EUR/GBP further north of the 0.8800 handle at the beginning of the week.
EUR/GBP now looks to Court ruling, Draghi
The European cross came under renewed downside pressure earlier in the session in response to miserable prints from advanced PMIs in core Euroland, showing that any ‘green dot’ must have to wait more than expected as the economic outlook in the region deteriorates further.
In the meantime, the Supreme Court will rule on Tuesday whether PM Boris Johnson’s suspension of the Parliament was unlawful. Still around the PM, latest news said B.Johnson could face corruption allegations when he was London’s mayor.
On this side of the Channel and at his testimony before the European Parliament, ECB’s M.Draghi reiterated the growth momentum in the region has slowed beyond the bank’s assessment. He once again reiterated the bank stands ready to adjust all instruments if needed, while he advocated for a stronger contribution of fiscal policy.
What to look for around GBP
The Sterling has corrected lower from recent tops as optimism around a Brexit deal has somewhat subsided in past hours. Investors’ focus has now shifted to the British Supreme Court as it is expected to rule on the likeliness that PM Boris Johnson could have acted unlawfully when suspended the Parliament a couple of weeks ago. All the looks thus remain upon the developments from the UK political arena amidst the so far parliamentary inactivity. It is worth recalling that the Parliament is due to re-open its doors in mid-October, coincident with the Queen’s Speech. In the meantime, Brexit limbo is seen as the exclusive driver for GBP in the foreseeable future, with the Irish backstop and a potential revised proposal from PM Johnson taking centre stage.
EUR/GBP key levels
The cross is gaining 0.14% at 0.8841 and faces the next hurdle at 0.8906 (50% Fibo of the May-August rally) seconded by 0.8952 (100-day SMA) and then 0.9039 (55-day SMA). On the downside, a breach of 0.8785 (monthly low Sep.20) would expose 0.8667 (78.6% Fibo of the May-August rally) and finally 0.8488 (monthly low May 6).
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