EUR/GBP struggles for direction around 0.8630

• The cross moves sideways around the 0.8630 region.
• Both EUR and GBP have rebounded from recent lows.
• Upcoming EU Parliamentary elections emerge as another driver.

Both the Sterling and the single currency are attempting a rebound from recent lows and are therefore leaving EUR/GBP to navigate within a clear direction in the 0.8640/30 band for the time being.

EUR/GBP apathetic on Brexit, now looks to EU elections

The European cross is now alternating gains with losses in the 0.8630 region following two consecutive daily pullbacks, with support so far emerging in the 55-day SMA near 0.8620.

The renewed negative sentiment in the risk-associated complex seen in past sessions has been undermining a more serious bullish attempt in the cross, which remains so far limited around the 0.8670 zone.

Regarding the Brexit negotiations and amidst the absence of progress in talks, market participants now seem to be looking to the upcoming EU Parliamentary elections in late May as some sort of potential driver for the next steps in the UK-EU divorce.

What to look for around GBP

Brexit negotiations are expected to be the dominant driver for volatility and price action around the Sterling in the months to come. 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 gaining 0.03% at 0.8632 and a break above 0.8647 (10-day SMA) would expose 0.8681 (high Apr.23) and then 0.8722 (high Mar.21). On the other hand, the next support lines up at 0.8621 (55-day SMA) seconded by 0.8618 (21-day SMA) and then 0.8502 (low Apr.3).