- EUR/GBP rebounds from 2-month lows, stays near 0.90.
- PM B.Johnson will visit Scotland later today.
- General elections could be in November.
As the Sterling loses some ground following Thursday’s advance, EUR/GBP manages to rebound from new 2-month lows and regain the upper-0.8900s.
EUR/GBP focused on Brexit, politics
The European cross manages to regain some poise after bottoming out in the 0.8940 area during early trade. Furthermore, the cross is down for the fourth consecutive week so far, extending the rejection from YTD peaks beyond 0.93 the figure recorded in early August, always on the back of the sharp rebound in the sentiment surrounding the Pound.
On the Brexit front, UK PM B.Johnson will visit Scotland later in the day, while SNP leader N.Sturgeon noted that general elections look more likely in October. Still in the UK, Labour leader J.Corbyn is expected to meet with opposition leaders today.
In the docket, German Industrial Production contracted 0.6% inter-month during July and EMU final Q2 GDP came in at 0.2% QoQ and 1.2% YoY. Across the Channel, house prices tracked by the Halifax index rose 0.3% MoM in August and 1.8% from a year earlier.
What to look for around GBP
Renewed upside momentum is pushing GBP to fresh tops in light of the recent political events in the UK. However, the Sterling is forecasted to remain under scrutiny as political effervescence is far from abated, while the likeliness of general elections has boiled down to a matter of time only. On another direction, the BoE remains in ‘silent-mode’ regarding Brexit and its potential outcomes. It is worth recalling that, at its last meeting, the central bank refused to incorporate the likeliness of a ‘hard divorce’ scenario to its projections.
EUR/GBP key levels
The cross is gaining 0.30% at 0.8969 and faces the next up barrier at 0.9055 (55-day SMA) followed by 09107 (21-day SMA) and then 0.9148 (monthly high Sep.3). On the other hand, a drop below 0.8941 (monthly low Sep.6) would expose 0.8922(100-day SMA) would expose 0.8891 (monthly low Jul.25) and then 0.8839 (200-day SMA).
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