- EUR/GBP remains directionless around 0.8980.
- EMU Industrial Production surprised to the upside in May.
- BoE’s G.Vlieghe said a ‘no deal’ Brexit could drag rates to zero.
The rally in EUR/GBP have met a very tough hurdle in the 0.9000 neighbourhood, although it so far manages to keep the trade close to that psychological handle.
EUR/GBP supported by the 10-day SMA
The European cross is down for the second session in a row today, coming under pressure after briefly recording new 6-month tops beyond the critical barrier at 0.90 the figure earlier in the week.
Persistent selling bias around the Sterling stemming from UK political uncertainty and absent news from the Brexit front has been lending support to the solid up move since May’s low in sub-0.8500 levels.
Back to Brexit and the BoE, MPC member G.Vlieghe said earlier in the day that leaving the EU without a deal could prompt rates to drop to the vicinity of zero, although, on the opposite side, he added that higher rates could be justified if such a scenario motivates inflation expectations to deanchor.
In the data space, EMU’s Industrial Production rebounded in May, expanding at a monthly 0.9%.
What to look for around GBP
Rising uncertainty in the UK political scenario and around the Brexit process is expected to keep the Pound under permanent pressure for the time being. In the UK economy, poor results from key fundamentals continue to add to the sour prospects for the economy in the months to come and collaborate further with the bearish view on the currency in the foreseeable future. On another direction, the overall tone from the BoE appears to have shifted towards a more dovish gear, while markets have started to price in the likeliness of a rate cut at some point in Q3/Q4.
EUR/GBP key levels
The cross is receding 0.06% at 0.8978 and a break below 0.8948 (21-day SMA) would expose 0.8872 (low Jun.20) and then 0.8826 (low Jun.5). On the flip side, the next hurdle is located at 0.9010 (monthly high Jul.10) seconded by 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3).