EUR/GBP looks consolidative in the mid-0.8800s
|- EUR/GBP loses some ground near 0.8860.
- Upside in the cross emerges at the 0.8900 handle.
- UK political uncertainty, Brexit, keeps weighing on GBP.
The resurgence of the buying interest around the Sterling is collaborating with the decline in EUR/GBP to the 0.8860 region after moving to the boundaries of 0.8890 during early trade.
EUR/GBP focused on Brexit, Payrolls
The European cross is prolonging the choppy activity so far this week, although a test/surpass of multi-month tops in the 0.8900 neighbourhood still remains elusive.
Despite the better tone surrounding the British Pound today, uncertainty in the UK political arena coupled with lack of progress in the Brexit negotiations is expected to remain well in place in for the next months and should be a permanent drag for GBP.
Today, GBP has picked up some attention after the Labour candidate L.Forbes defeated Brexit Party’s candidate M.Green at the Peterborough by-election. It is worth recalling that the Leave option reached 61% at the 2016 referendum.
What to look for around GBP
Heightened uncertainty around the Brexit negotiations and May’s successor keeps the pressure on the Sterling intact for the time being. Back to the UK economy, the recent bounce in the activity in the industrial and manufacturing sectors was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ recovery in these sectors. Additionally, 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 speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.
EUR/GBP key levels
The cross is losing 0.23% at 0.8859 and faces the next down barrier at 0.8826 (low Jun.5) seconded by 0.8781 (200-day SMA) and finally 0.8724 (low May 21). On the flip side, a break above 0.8902 (monthly high Jun.4) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3).
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