- EUR/GBP reverses Friday’s losses and retakes the 0.8970 region.
- The Sterling remains sidelined after recent lows.
- EMU Sentix index dropped further in July.
The better tone around the shared currency vs. some rangebound in the British Pound is helping EUR/GBP to clinch tops near 0.8970, where it is now looking to stabilize.
EUR/GBP still trades below 0.9000
The European currency is reversing part of Friday’s pullback, although the rally remains well in place, advancing for the fifth consecutive month for the time being.
In the meantime, the broad-based sideline theme in the global markets is expected to continue for the next couple of sessions ahead of the testimony by Fed’s J.Powell and the publication of the FOMC minutes, all due on Wednesday.
On the Brexit front, former Brexit boss Philip Rycroft said earlier in the day that a ‘no deal’ scenario was “fraught with risk”. It is worth mentioning that both candidates to Number 10 – Boris Johnson and Jeremy Hunt – left the ‘no deal’ option well on the table in case the UK and the EU could not clinch a deal by end of October.
Data wise today, another poor print in the euro-docket saw the Sentix index, which gauges investors’ sentiment, dropping to -5.8 for the current month.
In the UK calendar, Industrial/Manufacturing Production figures are due later in the week along with trade balance results and speeches by BoE’s Tenreyro and Vlieghe.
What to look for around GBP
Rising uncertainty in the UK political scenario and around the Brexit process is expected to keep the Pound under permanent pressure, while bouts of USD-selling remains the sole driver behind sporadic bullish attempts in Cable. In the UK economy, poor results from key fundamentals continue to add to the sour prospects for the economy in the months to come and collaborate further with the selling mood around the currency. 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 0.06% at 0.8961 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 0.8932 (21-day SMA) seconded by 0.8872 (low Jun.20) and then 0.8826 (low Jun.5).
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