“¢ German manufacturing PMI falls to the weakest level in six years and prompts some aggressive selling.
“¢ Composite Euro-zone manufacturing PMI drops to 71-month lows and added to the bearish pressure.
“¢ British Pound remains supported by the overnight news of an unconditional Brexit delay until April 12.
The EUR/GBP cross finally broke down of its late-Asian session consolidation phase and tumbled to fresh session lows in the last hour, albeit managed to find some support ahead of the 0.8600 handle.
The cross extended overnight retracement from one-month tops, levels beyond the 0.8700 handle, and the corrective slide accelerated further in wake of some aggressive selling around the shared currency following today’s disappointing release of flash Euro-zone manufacturing PMI prints.
Data released on Friday showed that that German manufacturing activity slipped deeper into contraction territory and grew at the weakest pace in six years in March. Meanwhile, the composite Euro-zone manufacturing PMI plunged to a 71-month low level of 47.6 and added to the bearish pressure.
Adding to this, the British Pound remained supported by the fact that the EU leaders, at the European Council meeting on Thursday, agreed to offer an unconditional Brexit delay until April 12. However, the British Parliament has to agree to the PM Theresa May’s Brexit deal for an extension till May 22.
However, given that May might still struggle to gain the required support to get her withdrawal agreement through the UK Parliament kept a lid on any runaway rally for the British Pound and turned out to be only factors lending some support to the cross, at least for the time being.
Hence, it would be prudent to wait for a strong follow-through selling before confirming that the recent corrective bounce might have already run out of steam and the cross is set to resume with its prior/well-established near-term bearish trajectory.
Technical levels to watch
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