Home EUR/GBP breaks above 0.8800, fresh 3-month peaks
FXStreet News

EUR/GBP breaks above 0.8800, fresh 3-month peaks

  • The Sterling remains on the defensive, pushes EUR/GBP higher.
  • Brexit concerns and no-confidence vote on May on the rise.
  • UK CPI rose 2.1% on a yearly basis during April.

The increasing selling pressure around the British Pound remains the name of the game so far today and is lifting EUR/GBP to fresh multi-month tops beyond 0.8800 the figure.

EUR/GBP focused on Brexit, May, data

The European cross is extending its rally for the third consecutive week on Wednesday – including the breakout of the critical 200-day SMA – always on the back of fresh Brexit jitters and rising uncertainty surrounding (still) PM May’s government.

In fact, speculations over the likeliness of a no-confidence vote on Theresa May has gathered further traction today, as MPs continue to push for her resignation, all adding to the already heightened uncertainty surrounding the government.

In the UK calendar, inflation figures tracked by the CPI showed consumer prices rose 0.6% MoM during April and 2.1% from a year earlier, both print coming in below expectations and therefore lending extra wings to the selling bias in GBP.

Further data saw Public Sector Net Borrowing at £4.97 billion, bettering consensus. Later in the week, Retail Sales for the month of April are due tomorrow.

What to look for around GBP

Uncertainty around the Brexit negotiations and May’s government has been intensifying in past hours, putting the Sterling under extra selling pressure. Investors’ focus now seems to have shifted to a no-confidence vote on the government, May’s potential resignation and the scarce chances of another vote on May’s Brexit plan at the House of Commons. On another direction and centred on the UK economy, recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ recovery in the sector. Further out, the current steady stance from the Bank of England appears justified by below-target inflation figures, mixed results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.

EUR/GBP key levels

The cross is gaining 0.34% at 0.8813 and a break above 0.8840 (monthly high Feb.14) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the downside, initial contention aligns at 0.8742 (high May 21) seconded by 0.8682 (100-day SMA) and then 0.8615 (55-day SMA).

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.