- The European cross faces further consolidation in the mid-0.8600s.
- Sentiment around EUR stays depressed following poor data.
- Brexit limbo provides no fresh headlines in either direction.
The offered bias around the single currency and the Sterling is prompting EUR/GBP to remain sidelined in the 0.8650 region for the time being.
EUR/GBP looks to data, Brexit
The European cross remains unable to define a clear direction so far today and stays trapped within a multi-day consolidative theme around the 0.8650 region.
Recent disappointing data releases in Germany have reinforced the selling mood surrounding the shared currency, while the sentiment in the Sterling is following suit in response to the absence of news around Brexit and the lack of progress in the UK government-Labour talks.
In the data space, UK’s CBI Distributive Trades Survey came in at 13 for the current month from -18, while Mortgage Approvals will be published tomorrow.
What to look for around GBP
Brexit negotiations are expected to be the dominant driver for volatility and price action around the Sterling following the delay of Article 50 to October 31. Recent positive data from the industrial sector and PMI were exclusively driven by companies stockpiling in case of a ‘hard Brexit’ outcome, morphing into a temporary relief for GBP although failing to allay concerns over the outlook on the UK economy and the currency in the longer run. 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 already rising speculations of a ‘no-hike’ this year.
EUR/GBP key levels
The cross is up 0.01% at 0.8645 and a break above 0.8681 (high Apr.23) would expose 0.8722 (high Mar.21) and finally 0.8746 (100-day SMA). On the downside, the immediate support lines up at 0.8624 (55-day SMA) seconded by 0.8618 (21-day SMA) and then 0.8502 (low Apr.3).