EUR/GBP grinding lower, approaches 0.8900
|- EUR/GBP remains on the defensive near 0.8900
- The recovery in the Sterling pushes the cross lower.
- B.Johson’s cabinet reshuffle reinforces ‘no deal’ scenario.
EUR/GBP keeps losing momentum this week and is now threatening to test the key support at 0.8900 the figure.
EUR/GBP looks to ECB, BoJo
The relief rally in the British Pound brought in some selling pressure around the European cross, particularly after Boris Johnson was elected new UK PM yesterday.
One of the first moves by the former London mayor was to purge the cabinet and have it oriented towards a Brexit ‘no deal’ with the appointments of D. Raab, P.Patel, A.Leadsom, L.Truss, J.Rees-Mogg and S.Javid.
However, the renewed upbeat sentiment around the Sterling could be short-lived and only a consequence of the already large short positions in GBP, as demonstrated by the persistent increase in speculative shorts in past weeks.
Anyway, on this side of the Channel, the main focus will be on the ECB event amidst rising bets of an announcement of looser monetary measures, which contemplate lower interest rates, further QE and the probable change of ‘forward guidance’.
Earlier in the day, poor IFO figures added to the recent disappointment from flash PMIs and forced EUR to recede further ground.
EUR/GBP key levels
The cross is retreating 0.11% at 0.8913 and a breach of 0.8905 (monthly low Jul.24) would open the door to 0.8890 (55-day SMA) and then 0.8872 (low Jun.20). On the upside, the next barrier aligns at 0.9005 (high Jul.23) seconded by 0.9051 (monthly high Jul.17) and finally 0.9092 (2019 high Jan.3).
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