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  • The cross clings to gains in the 0.8630 region.
  • ECB’s Private Sector Loans expanded less than expected.
  • UK local elections next month in centre stage.

The renewed better tone in the riskier assets is giving support to EUR/GBP today, which is now clinging to daily gains in the 0.8630 region.

EUR/GBP supported at the 21-, 55-day SMAs

After three consecutive daily pullbacks, the European cross is now finding some support in the 0.8630/20 band, where coincide the 21-day and 55-day SMAs.

The improved note in the risk-associated complex is lending oxygen to both the Sterling and the shared currency amidst the resurgence of some selling bias in the greenback, particularly following last week’s US GDP and inflation figures.

Earlier in the session, the ECB’s Private Sector Loans expanded less than expected during March, while the M3 Money Supply rose more than initially estimated. Additionally, the Business Climate dropped to 0.42 during the same period and Consumer Confidence ticked lower to -7.9.

In the UK, all the attention has now shifted to the upcoming local elections due next month, where prior surveys are already pointing to a strong defeat of the Conservative Party.

What to look for around GBP

Market participants have now shifted their focus to the upcoming local elections in the UK, with the failure to reach a Brexit deal is expected to ‘punish’ Tories. In the meantime, the absence of fresh Brexit headlines appears to reinforce the cautious stance around the Sterling. Recent positive data from the industrial sector and PMI were exclusively driven by companies stockpiling in case of a ‘hard Brexit’ outcome, morphing into a temporary relief for GBP although failing to allay concerns over the outlook on the UK economy and the currency in the longer run. In addition, 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 already rising speculations of a ‘no-hike’ this year.

EUR/GBP key levels

The cross is gaining 0.04% at 0.8628 and a break above 0.8646 (10-day SMA) would expose 0.8681 (high Apr.23) and then 0.8722 (high Mar.21). On the other hand, the next support lines up at 0.8620 (low Apr.29) seconded by 0.8502 (low Apr.3) and finally 0.8483 (low Mar.27).