- EUR/GBP bears need cable to hold in there and to clutch to UK CPI data.
- Brexit headlines have weighed on sterling with eyes on a break and hold above the 10-D SMA in the cross.
EUR/GBP has bounced on the recent and forever conflicting Brexit headlines. EUR/GBP has been trading between 0.8861 and 0.8920 and between the 10-D SMA and 100-D SMA on the downside.
EUR/GBP was initially better offered in the European session following the UK CPI impressive beat – (UK CPI was a big beat, 2.7% vs 2.4% forecasted and 2.5% previous y/y for August) – this pushed the cross down to test the Asian session low and the lowest level since the BoE last hiked justifying the BoE’s decision to raise rates last month.
However, the most recent headline that the market has reacted to is that from Junker who said that the EU and UK are far away from a Brexit deal. Sterling fell over at 1.3162 and dropped to the 100-hr SMA down at 1.3126. Ireland PM’s, Varadkar, comments were no less promising in saying that we are ‘no closer to a Brexit deal than in March’, and UK PM May followed up by confirming that “this government will never accept a second referendum, ” saying that the UK will be leaving EU in March 2019. She also agrees with Barnier that a new proposal for Irish border is needed while the original EU proposal was not going to be acceptable to the UK.
Euro bulls are gunning for space above the 1.1725 level
Meanwhile, euro bulls are gunning for space above the 1.1725 recent highs, stepping in an protecting the 38.2% fibo down at the day’s lows around 1.1650 having scored a high of 1.1715 so far. The price is currently sitting around1.1672. However, should today’s geopolitical events leave us in limbo still, including NAFTA talks and ongoing uncertainty in respect to the heightened risks associated with the China and US trade spat, markets may have to turn back to economic fundamentals in preparation the FOMC and US GDP next week – which may turn the tables over in respect to the US dollar and disrupt the euro’s case for the 1.18 handle and subsequently keep the pressure on EUR/GBP bulls when taking into account the UK’s CPI data today potentially, leaving the cross in limbo – EUR/GBP bears need cable to hold the 1.3080/50 territories.
EUR/GBP levels
The price has been closing below 0.8900 the figure since last Friday and has opened space to the 2-month uptrend at 0.8877 ahead of the 100-D SMA at 0.8863. Eyes would then turn to the 0.8816’s as the wide-open space opportunity – This would be in line with 0.8720 as the previous triangle lows, (the 15th June low), that guard the double bottom lows at 0.8697. A break of the 10-D SMA opens 0.8940 and 0.8970 targets with 0.9032 on the wide.
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