- EUR/GBP clinches fresh multi-month peaks at 0.9051.
- GBP remains under pressure on Brexit woes.
- UK CPI rose in line with estimates during June, 2.0% YoY.
The increasing selling bias around the British Pound is helping EUR/GBP to extend the breakout of the key 0.9000 handle.
EUR/GBP bid after data, Brexit
The Sterling took another hit on Tuesday and its effects persist well and sound today after Tory candidates B.Johnson and J.Hunt said a ‘no deal’ scenario remains well on the table.
This news adds to yesterday’s comments from both candidates to succeed Theresa May at Number 10 that the controversial Irish backstop is ‘dead’, all exacerbating the selling pressure in GBP.
In the data space, UK inflation figures failed to ignite a meaningful positive reaction in the Sterling after consumer prices rose at an annualized 2.0% and came in flat from a month earlier (vs. a 0.3% gain forecasted).
In Euroland, final June CPI figures matched the preliminary prints, leaving no room for surprised, as expected.
What to look for around GBP
Rising uncertainty in the UK political scenario plus rising chances of a Brexit ‘no deal’ are expected to keep the downside pressure on the Sterling well and sound for the foreseeable future. In the UK economy, poor results from key fundamentals continue to add to the sour prospects for the economy in the months to come and collaborate further with the bearish view on the currency. On another direction, the overall tone from the BoE appears to have shifted towards a more dovish gear, while markets have started to price in the likeliness of a rate cut at some point in Q3/Q4.
EUR/GBP key levels
The cross is gaining 0.10% at 0.9043 facing the next hurdle at 0.9051 (monthly high Jul.17) seconded by 0.9062 (high Jan.11) and finally 0.9092 (2019 high Jan.3). On the other hand, a break below 0.8961 (21-day SMA) would expose 0.8872 (low Jun.20) and then 0.8826 (low Jun.5).