- EUR/GBP has moved up to the descending 100 hourly SMA EUR/GBP, supported by the 21-4hr SMA.
- The euro benefits from the dollar’s heavy correction from the highs of 96.9840 to 96.6570 while sterling in consumed on higher risks of a no-deal Brexit scenario.
EUR/GBP has been making a come back in a wave of demand for the euro which has been respecting the psychological support of 1.13 the figure as the greenback gives back ground on the downward revisos on retail sales data.
“July core (“control group”) retail sales rose 0.5% m-o-m, slightly stronger than expectations (Nomura and Consensus: 0.4%). Core retail sales in June, however, were revised down to a 0.1% decline from no change (note that core retail sales are used for estimating personal consumption of GDP),” analysts at Nomura explained.
Bank of England to remain on hold this year
“The fading impact of sterling’s post-Brexit fall is likely to keep a lid on core inflation over the coming months, adding another reason for the Bank of England to remain on hold this year as Brexit risks mount,” analysts at ING Bank explained noting that UK inflation is on the rise again, but not expecting this to last. For the Bank of England, they argued that they will likely remain on the sidelines for the next few months, as Brexit uncertainty becomes an increasing concern: “Talk of ‘no deal’ is ramping up, and there’s a risk this begins to impact sentiment if negotiations remain in deadlock as we head into the end of the year. For that reason, we don’t expect another rate hike before May 2019 at the earliest.”
EUR/GBP levels
EUR/GBP has moved to the 10-D SMA and away from the 2-month uptrend at 0.8877 and the 0.8720 triangle lows, (the 15th June low), that otherwise guard the double bottom lows at 0.8697. 0.9034 is back into focus as the October 2017 high that comes in as the key upside target on a clearance of this resistance at 0.9015/20 (Nov 2017 highs). On the wide, 0.9308 comes as the August 2017 high. However, a correction lower 0.8620 on the wide protects a run towards 0.8526 as being the 78.6% retracement of the move from 2017 on the wide.
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