- EUR/GBP comes under extra pressure below 0.8700.
- EUR-selling stays behind the down move today.
- EU-UK Brexit negotiations expected to continue this week.
The renewed and quite moderate selling pressure around the single currency is weighing on EUR/GBP and dragging it to record fresh 5-month lows in sub-0.8700 area.
EUR/GBP focused on Brexit talks
The renewed weakness around EUR is forcing the European cross to resume the leg lower below the 0.8700 support, printing at the same time fresh mutli-month lows.
Indeed, while the Sterling remains cautiously bullish on latest (at least not bad) Brexit developments, the single currency has come under increasing selling pressure mainly in response to USD-dynamics.
On the Brexit front, the Pound remains vigilant on alternating hopes of a Brexit deal, although always amidst the persistent scepticism from investors regarding an agreement before/at the October deadline. In this regard, EU-UK talks are expected to continue throughout the week ahead of the crucial EU Summit on October 17th-18th.
Data wise today, German Economic Sentiment bettered expectations although it ticked a tad lower to -22.8 for the current month. In addition the Current Conditions component also dropped to -25.3. In the same line, Economic Sentiment in the broader Euroland deteriorated further to -23.5, although less than forecasted.
In the UK, the jobless rate rose to 3.9% on the three months ended in August, the Claimant Count Change came in at 21.1K (vs. 26.5K estimated) and Average Earnings +Bonus rose 3.8%.
EUR/GBP key levels
The cross is losing 0.53% at 0.8699 and a drop below 0.8689 (monthly low Oct.15) would expose 0.8667 (78.6% Fibo of the May-August rally) and then 0.8488 (monthly low May 6). On the other hand, the next resistance aligns at 0.8824 (200-day SMA) seconded by 0.8906 (50% Fibo of the May-August rally) and finally 0.8973 (100-day SMA).
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