“¢ Brexit optimism continues to underpin the British Pound.
“¢ Upbeat UK employment details provide an additional boost.
“¢ Traders now eye German ZEW survey results for fresh impetus.
The EUR/GBP cross failed to build on the early attempted recovery move and refreshed over one-month lows post-UK employment details.
According to the latest UK jobs data, released just a while ago, the number of people claiming unemployment-related benefits rose by 8.7K in August, less than 10K rise anticipated, and the unemployment rate held steady at 4.0%.
Adding to this, Average Earnings also bettered market expectation and ticked higher to 2.9% q/y (excluding bonus) from 2.7% previous and 2.6% q/y (including bonus), offsetting concerns about depressed real wage growth.
This against the backdrop of overnight optimistic Brexit comments by the EU’s chief Brexit negotiator Michel Barnier, saying that a Brexit deal with the UK is realistic within six to eight weeks, further collaborated to the British Pound’s relative outperformance against its European counterpart.
However, a goodish pickup in the shared currency, supported by easing worries over Italian budget and broad-based USD weakness, helped limit further downside,at least for the time being and ahead of the German ZEW survey results.
It would now be interesting to see if the cross is able to attract any buying interest at lower levels or continues with its bearish trajectory as investors start positioning for this week’s key event risks – the BoE and ECB monetary policy updates on Thursday.
Technical levels to watch
Any further downside is likely to find some support near 100-day SMA, around the 0.8855-50 region, and is closely followed by the very important 200-day SMA support near the 0.8835 region. On the flip side, any meaningful recovery attempt beyond 0.8915-20 immediate hurdle is likely to confront some fresh supply near mid-0.8900s, above which the cross is likely to make a fresh attempt towards conquering the key 0.90 psychological mark.
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