- The better tone in GBP is forcing the cross to shed some ground.
- The mid-0.8600s emerges as a tough barrier for bulls.
- Brexit cross-party talks still show no signs of progress.
The Sterling is picking up some pace at the beginning of the week and forces EUR/GBP to retreat from recent tops in the proximity of 0.8650.
EUR/GBP gains limited near 0.8650
After five consecutive daily advances, the European cross is now showing some signs of exhaustion ahead of the ley barrier near 0.8650, all on the back of renewed upside momentum around the British Pound and the single currency.
In the meantime, the risk-associated space continues to look to US-China trade dispute as the main driver for the price action in the global markets and amidst increasing uncertainty following the absence of noticeable progress in Washington.
In the Brexit scenario, ongoing cross-party talks has yielded no significant advance for the time being, while shadow Brexit secretary Sir Keir Starmer said the only way a cross-party Brexit deal could get through Parliament is via a public vote.
In the calendar, UK labour market report is due tomorrow along the ZEW survey in Germany and the euro bloc.
What to look for around GBP
Market participants have shifted their focus to the resumption of cross-party talks between the government and the opposition, although there is no significant progress yet. Recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ increase in the sector. 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 retreating 0.11% at 0.8625 and faces the next support at 0.8593 (55-day SMA) followed by 0.8488 (low May 6) and then 0.8483 (low Mar 27). On the downside, a breakout of 0.8648 (high May 9) would expose 0.8681 (high Apr.23) and finally 0.8722 (high Mar.21).
Share
