EUR/GBP consolidates daily losses and holds near 0.8900 as Johnson becomes PM
|- Pound among top performers across the board on Wednesday.
- Euro under pressure after PMI data and ahead of ECB meeting.
- EUR/GBP heads for lowest close in a month, after breaking key 0.8950 support area.
The EUR/GBP pair is back near daily lows after a rebound found resistance at 0.8930. As of writing trades at 0.8915, down 50 pips for the day, on its way to the weakest close in a month.
Sterling welcomes Johnson
A few minutes ago, Boris Johnson become the new UK PM. He offered a statement and mentioned the UK will come out of European Union on October 31, “no ifs or buts”. Also he presented a domestic agenda. The Pound remained steady consolidating important gains for the day. The focus now turn to Johnson’s cabinet appointments.
Regarding the Euro, it remains under pressure affected today by a lower-than-expected PMI reading and also ahead of tomorrow’s European Central Bank meeting. “The Eurozone's weak set of flash PMI readings have left markets looking for higher odds that the ECB could act as soon as tomorrow. The front end of the EUR's curve is pricing in close to a 50/50 chance of a 10 bps rate cut this week while 13 bps of easing is now priced for September, but we are keeping an eye on terminal rate for directional clues for EUR from here”, wrote TDS analysts.
Another boost from technicals
The EUR/GBP accelerated to the downside after breaking the key support area of 0.8950 that capped the downside over the last three weeks. Once it dropped below, the euro weakened further.
EUR/GBP bottomed at 0.8905, the lowest intraday level since June 20. The 0.8900 zone has become the new short-term key support, followed by 0.8870. Technical indicators point to further losses at the moment. A recovery back above 0.9000 could change the bias.
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