EUR/GBP moves to 3-month tops near 0.8760 on Sterling sell-off
|- GBP-selling keeps fuelling the upside in the cross.
- Brexit cross-party talks ended without deal (as expected).
- PM May could announce a timetable to leave Number 10.
Further selling pressure around the British Pound is pushing EUR/GBP further north of 0.8700 the figure, reaching at the same time fresh 3-month tops.
EUR/GBP higher on Brexit, trade
The European cross keeps edging higher this week, navigating in the area of multi-month tops well beyond the 0.8700 handle against the backdrop of increasing downside pressure in the Sterling and a generalized sour sentiment in the risk-associated space.
In fact, US-China trade tensions have been exacerbated as of late after China ruled out the continuation of the negotiations, at least in the near term.
On the domestic front and back to Brexit, PM Theresa May is expected to announce a timetable for her departure from Number 10, while Labour leader J.Corbyn said the party and the government compromise to clinch an agreement ‘have gone as far as they can’, all after cross-party talks ended without any deal.
What to look for around GBP
While cross-party talks unsurprisingly yielded no results, investors’ attention now seem to have shifted to the potential exit of PM May in the near term and her potential successor. On another direction, recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ recovery in the sector. In addition, 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 up 0.24% at 0.8752 and a break above 0.8792 (200-day SMA) would expose 0.8821 (high Feb.5) and finally 0.8840 (monthly high Feb.14). On the flip side, initial support aligns at 0.8688 (100-day SMA) followed by 0.8604 (55-day SMA) and then 0.8488 (low May 6).
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