Search ForexCrunch
  • The European cross trades on the defensive near the 0.8800 handle.
  • Renewed and strong sentiment around GBP is behind the decline.
  • The BoE keeps the repo rate unchanged at 0.75% at today’s meeting.

The positive sentiment around the British Pound remains well and sound for the second day in a row and is forcing EUR/GBP to recede to the vicinity of 0.8800 the figure.

EUR/GBP weaker on strong Sterling

The European cross is down for the second day in a row on Thursday, coming under increasing selling pressure after hitting fresh 5-week peaks near 0.8950 earlier in the week although so far finding some contention around the 100-day SMA in the 0.8820 zone.

The Sterling has been gathering extra pace following auspicious headlines from the Brexit talks, particularly after UK’s D.Raab advocated on Wednesday for a deal by November 21st.

Today’s BoE event left no room for surprises, as the ‘Old Lady’ left the repo rate and the asset purchase facility unchanged at 0.75% and £435 billion, matching the broad consensus.

At his press conference today, Governor Carney said the central bank could respond to Brexit raising or cutting the key interest rate.

Earlier in the session, UK’s manufacturing PMI dropped to 51.1 for the month of October, also missing expectations.

EUR/GBP key levels

The cross is now losing 0.63% at 0.8822 facing the next down barrier at 0.8805 (low Nov.1) seconded by 0.8720 (low Oct.10) and finally 0.8696 (low May 30). On the upside, a breakout of 0.8899 (55-day SMA) would expose 0.8941 (high Oct.30) and then 0.9001 (high Sep.24).