- EUR/GBP extends the upside to the 0.8970 region.
- BoE’s M.Carney speaks later in the morning.
- GBP under pressure as ‘no deal’ options stays on the table.
The selling mood around the Sterling is helping EUR/GBP to advance to fresh weekly highs in the 0.8970/80.
EUR/GBP looks to Carney, Brexit
The European cross is posting gains for the fifth consecutive session on Wednesday, always bolstered by the resumption of the leg lower in the British Pound.
In the meantime, uncertainty around Brexit and the UK politics keep dictating the sentiment surrounding the Sterling. In this regard, candidates B.Johnson and J.Hunt have not ruled out a ‘no deal’ Brexit, although J.Hunt noted that he would not support a hard exit scenario if there was a ‘prospect of a better deal”.
It is worth recalling that if the UK Parliament rejects leaving the EU without a deal it could open the door to a general election.
Later in the session, BoE’s Inflation Report Hearings will be the main publication along with speeches by Governor Carney and MPCs Cunliffe, Tenreyro and Saunders.
Earlier in the session, UK’s Gross Mortgage Approvals ticked lower to 42.4K, also missing initial estimates.
What to look for around GBP
Rising uncertainty in the UK political scenario is expected to keep the bearish stance intact around the British Pound, while bouts of USD-selling remains the sole driver behind sporadic bullish attempts in Cable. In the UK economy, mixed-to-poor results from fundamentals continue to add to the sour prospects for the economy in the months to come. On another direction, the overall tone from the BoE appears to have shifted towards a more neutral (dovish?) gear, while uncertainty around Brexit is seen as the main obstacle in determining the next move on rates.
EUR/GBP key levels
The cross is gaining 0.14% at 0.8964 and a break above 0.8974 (monthly high Jun.17) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the other hand, the next down barrier is located at 0.8872 (low Jun.20) followed by 0.8826 (low Jun.5) and then 0.8778 (200-day SMA).
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