EUR/GBP consolidates sterling strength within a technical bearish bias to 200- D SMA

EUR/GBP has stabilised a touch below the 0.89 handle as sterling runs into offers and consolidates the extended correction from the 19th July’s rally. Currently, EUR/GBP is trading at 0.8878 with a high of 0.8902 and a low of 0.8872 in a  relatively becalmed market on Wednesday in the North American trade.

While sterling has been better off in recent trade, there has been a couple of data hits for the cross in today’s  trade, where Eurozone money supply picked up in Jun (+4.4%). The IFO Business Climate index weakened slightly this month (101.7 from 101.8 in Jun and against 101.5 expected) although the data had little impact on the EUR as investors look onto the Juncker’s meeting with President Trump.  

As for the UK, the UK’s CBI retail trends survey for July reflected weaker sales volumes this month (+20, from +32 in Jun), although the broader GBP sentiment was lifted yesterday on news that PM May will handle Brexit negotiations directly with the EU now, providing some relief to the pound.  

ECB to offer some clarity  

Today’s trade talks between Trump and European Commission President Jean-Claude  Juncker  are in view where the odds of both parties finding a common agreement is deemed to be fair are rather low. In respect to the ECB meeting, analysts at TD Securities said that markets should look for clarity following the  ECB’s forward guidance where  the English version differs from the French and German accounts on the timing of a possible rate hike: We think this discrepancy – one year away – is more noise than signal and see little directional impetus for EURUSD at this time. 1.1500/1.1850 should be a range that is respected.”

EUR/GBP levels

From a technical perspective, analysts at Commerzbank ague that EUR/GBP is showing signs of failure just ahead of the 0.8967 March high and the 0.8964 50% retracement, where they are looking for a small pullback at this stage: “This is viewed as just some  near term  profit taking – Dips back will find initial support at the 200 day ma at 0.8819 and the 55 day ma at 0.8805. Above 0.8967 will target the 0.9034 October 2017 high.”