- EUR/GBP loses further ground, trades closer to 0.9200.
- GBP-buying drags the cross lower for yet another session.
- UK Retail Sales surprised to the upside in July.
The increasing buying pressure around the Sterling is sponsoring another decline in EUR/GBP with the next target at the 0.9200 handle.
EUR/GBP weaker on upbeat UK data
The European cross is down for the fourth session in a row on Thursday amidst the better mood in the British Pound and steady-to-bearish price action surrounding the shared currency.
GBP gained extra ground today after UK Retail Sales expanded 0.2% from a month earlier in July and 3.3% over the last twelve months. Sales excluding Autos and Fuel also came in above estimates, expanding 0.2% inter-month and 2.9% on a yearly basis.
On the Brexit front, nothing new other than speculations of potential snap elections if PM B.Johnson does not pass a potential no-confidence vote. This motion is likely to be sponsored by Labour leader J.Corbyn along with further plans of delaying Brexit, calling for general elections and favouring another referendum. Of course, markets have already tilted Corbyn’s plan as nonsensical.
What to look for around GBP
The outlook on the British Pound looks increasingly fragile in tandem with rising odds for a Brexit ‘no deal’ on October 31. In the meantime, the Irish backstop remains the exclusive obstacle for the resumption of talks between London and Brussels, although the subject appears relegated in light of preparations for the ‘hard-divorce’ case. Back to the UK economy, latest poor advanced Q2 GDP figures added to the already gloomy panorama from UK fundamentals, keeping the sour prospect for the economy and the currency unchanged in spite of recent upbeat inflation figures for the month of July. At its last meeting, the BoE kept the monetary conditions unchanged, although it refuses to factor in a ‘no deal’ scenario in its projections. The BoE still sees a ‘soft Brexit’ outcome and reiterated that rates are seen increasing gradually in order to bring inflation to the bank’s target.
EUR/GBP key levels
The cross is retreating 0.22% at 0.9214 and a drop below 0.9123 (21-day SMA) would expose 0.9088 (low Jul.31) and then 0.9006 (55-day SMA). On the flip side, the next up barrier is located at 0.9324 (2019 high Aug.12) followed by 0.9411 (monthly high Oct. 2009) and finally 0.9804 (all-time high December 2008).
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