EUR/GBP extends consolidation near multi-month highs above 0.88
|- ECB's Rehn says first rate hike is further away than it was a few months ago.
- UK PM candidates voice intention to avoid no-deal Brexit.
- Unemployment rate in Germany rises to 5% in May.
After touching its highest level since mid-February at 0.8853 last week, the EUR/GBP pair staged a technical correction and has been moving sideways in a tight channel above the 0.88 mark since the start of the week as neither the EUR nor the GBP can attract investors. As of writing, the pair was unchanged on a daily basis at 0.8820.
Several news outlets today reported that the European Commission sent a letter to the Italian government on its finances. Although it's not clear if the market speculation about the EU possibly fining Italy $4 billion over its budget is true or not, the letter reportedly notes that Italy failed to make sufficient progress. Commenting on that matter, European Central Bank vice president Luis de Guindos said that low growth was Italy's primary problem.
Meanwhile, ECB Governing Council member Olli Rehn today said that the bank was still trying to figure out if the soft patch was temporary or not. Regarding the policy outlook, Rehn argued that the first rate hike was further away than they forecasted a few months ago. "Reinvestment of maturing bonds will continue beyond first rate hike," Rehn added.
Earlier today, the data published by Destatis showed that the unemployment rate in Germany ticked up to 5% in May from 4.9% in April to miss the market expectation for a no-change.
On the other hand, several candidates to replace British Prime Minister Theresa May today voiced their willingness to avoid a no-deal Brexit but failed to help the pound sterling find demand. James Cleverly told BBC Radio stated that no-deal Brexit was not a preferred option and Health Minister Matt Hancock argued that no-deal was not a policy choice available for the next PM.
Technical levels to consider
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