EUR/GBP pushes higher above the 0.8700 mark, 3-month tops

  • Renewed GBP selling pushes the cross above the 0.87 handle.
  • Speculations on another Brexit deal vote remain on the rise.
  • ECB-speak should keep the single currency in the limelight.

Renewed and strong selling pressure around the Sterling keeps sustaining the rally in EUR/GBP above the key 0.8700 the figure.

EUR/GBP looks to risk trends, Brexit

The march north in the European cross remains everything but abated so far this week and it has now broken above the critical 0.8700 barrier, recording at the same time fresh 3-month tops and shifting its target to the 200-day SMA just below 0.8800 the figure.

In the meantime, the cross keeps looking to the risk appetite trends for direction, which remain in direct correlation with developments from the US-China trade front. In this regard it is worth mentioning that President Trump has postponed any decision on tariffs on autos and auto-parts for later in the year.

In the Brexit universe, PM Theresa May is putting MPs under extra pressure in order to get her Brexit deal passed on an eventual vote at the House of Commons in early June.

Data wise today, ECB Board member’s De Guindos, Coeure and Prate are due to speak.

What to look for around GBP

Market participants keep looking to cross-party talks between the government and the opposition party. Although talks yielded no significant progress yet, market participants have shifted their focus on another potential vote of May’s deal, likely to be held early next month. On another front, recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ recovery in the sector. 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 speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.

EUR/GBP key levels

The cross is up 0.20% at 0.8738 and a break above 0.8793 (200-day SMA) would expose 0.8821 (high Feb.5) and finally 0.8840 (monthly high Feb.14). On the flip side, initial support aligns at 0.8691 (100-day SMA) followed by 0.8601 (55-day SMA) and then 0.8488 (low May 6).

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