- EUR/GBP edges higher to the mid-0.9100s.
- GBP-selling behind the up move in the cross.
- Brexit woes keep weighing on the Pound.
The now softer note around the Sterling is pushing EUR/GBP to the mid-0.9100s, or daily highs.
EUR/GBP up on GBP-weakness, BoJo comments
The European cross is recovering from yesterday’s pullback in response to heightened concerns on the Brexit negotiations (if we can call it that), particularly the rising possibility of a hard-Brexit on October 31.
In fact, the Brexit front deteriorated a tad further earlier today after PM Boris Johnson made it pretty clear that the Irish backstop (‘anti-democratic’ according to Johnson) needs to be removed in order to resume talks between London and Brussels. The severe tone from B.Jonhson’s statement came in after EU officials have previously rejected his plan including ‘alternative arrangements’ for the border.
In the docket, nothing scheduled in Euroland while UK’s Public Sector Net Borrowing shrink to £1.97 billion during July, missing consensus albeit lower than June’s £5.67 billion.
What to look for around GBP
The Sterling is suffering the lack of progress around the Brexit talks while the removal of the ‘Irish backstop’ has now become the conditio sine qua non for any resumption of EU-UK negotiations. On another direction, the BoE kept the monetary conditions unchanged at its last meeting, although it refuses to factor in a ‘no deal’ scenario in its projections for the time being. The BoE still sees a ‘soft Brexit’ outcome and reiterated that rates are seen increasing gradually in order to bring inflation to the bank’s target.
EUR/GBP key levels
The cross is gaining 0.41% at 0.9155 and faces the next hurdle at 0.9202 (10-day SMA) followed by 0.9324 (2019 high Aug.12) and then 0.9411 (monthly high Oct. 2009). On the flip side, a drop below 0.9088 (low Jul.31would expose 0.9025 (55-day SMA) and then 0.8891 (monthly low Jul.25).