GBP: Sterling weighed down by Boris Johnson' plans
|Sterling fell significantly on Monday, apparently weighed down by plans by British Prime Minister Boris Johnson to double public investment.
The sell-off was particularly evident against the Euro, as the Euro was slightly lifted by better than expected Eurozone and German CPI confidence indicators. Other developments also brought the Swiss Franc higher. On the other hand, the Yen and Dollar followed in the footsteps of the Pound as the weakest on Monday.
Technically, EURGBP shows a very clear upward acceleration. A sustained break from the 0.9182 level would open the way back to the average high of +/- 0.9300 with a continued peak price of 0.9498. Last week's high price of 0.9099 (50.0% FR level) will be a strong support. GBPCHF passed the 50.0% retracement from the low price of 1.1630 after breaking out from the previous low at 1.1728. Advanced support is at the 1.1545 level (61.8% FR), but you need to pay attention to previous low prices. If the movement continues, it will open the path for a test of 1.1115.
The Eurozone Economic Sentiment indicator rose to 75.7 in June, compared to 67.5, but missed expectations of 80.0. However, an increase of +2.2pts is still the largest increase m/m. Also, the Labour Expectations Indicator resumed a steep recovery last month and jumped from 70.1 to 82.8. Depending on the sector, employment plans have so far recovered about 40% to 60% of the losses recorded in March and April. Meanwhile, German CPI rose 0.6% m/m in June, above expectations of 0.3% m/m. For the annual measure, CPI increased to 0.9% y/y, up from 0.6% y/y and beyond expectations of 0.6% y/y.
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