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  • The cross met support in the 0.8570/65 band earlier in the day.
  • UK Construction PMI came in above estimates at 50.5 in April.
  • PM T.May expects the UK to leave before October 31.

Today’s better tone in the riskier assets is now supporting the up move in EUR/GBP to the proximity of 0.8600 the figure.

EUR/GBP now re-targets 0.8600

The European cross dipped to the 0.8570 region during early trade, although the recovery in the single currency collaborated with the rebound to fresh tops near the 0.8600 barrier.

In fact, the European currency regained some poise today and reversed yesterday’s weakness after the less dovish than expected FOMC event sparked a fresh wave of selling impetus around EUR.

In the UK data space, Construction PMI rose to 50.5 during April, surpassing prior surveys. Later in the day, investors expect the BoE to keep the refi rate and the forward guidance unchanged at its meeting, and to reiterate that Brexit uncertainty still weighs on the outlook.

Around Brexit, UK PM Theresa May said she hopes the UK to leave the European Union before the October 31 deadline. She also insisted on getting Labour support on a new proposal including customs union as a pre-condition for a parliamentary vote.

What to look for around GBP

Market participants have now shifted their focus to today’s local elections in the UK and the resumption of cross-party talks regarding the Brexit negotiations. 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 0.05% at 0.8580 and a break above 0.8627 (21-day SMA) would expose 0.8681 (high Apr.23) and finally 0.8722 (high Mar.21). On the other hand, the next support lines up at 0.8568 (low May 2) followed by 0.8502 (low Apr.3) and then 0.8471 (2019 low Mar.13).