“¢ UK construction PMI unexpectedly jumps to 55.8 in July.
“¢ Market reaction turns out to be rather muted ahead of BoE.
The EUR/GBP cross surrendered early modest gains to the 0.8900 neighborhood but has managed to reverse a downtick to fresh weekly lows post-UK PMI.
The cross extended this week’s retracement slide from over one-week tops and had a rather muted reaction to the final Markit UK Construction PMI, which unexpectedly jumped to 55.8 in July, albeit did little to attract any buying around the British Pound.
Meanwhile, a heavily offered tone surrounding the EUR/USD major also seemed extending some additional support, which coupled with investors’ reluctance to place aggressive bets, ahead of the highly anticipated BoE, should further contribute towards limiting any deeper losses, at least for the time being.
The UK central bank is widely expected to raise its key lending rate by 25 basis points to 0.75% and will also release its Quarterly Inflation Report (QIR) with the updated projection for inflation and economic growth over the next 2 years.
This coupled with the BoE Governor Mark Carney’s comments, at the post-meeting press conference, should infuse a fresh bout of volatility around the GBP crosses and help determine the pair’s next leg of directional move.
Technical levels to watch
Immediate support is pegged near the 0.8865-60 region, below which the cross is likely to slide further towards 0.8820 intermediate support en-route the 0.8800 handle.
On the upside, momentum back above the 0.8900 handle might continue to confront fresh supply near 0.8935 level and is followed by multi-month highs resistance near the 0.8955-60 region.