EUR/GBP moves to daily highs near 0.9080 on poor PMI
|- EUR/GBP advances further and approaches 0.9100.
- UK political uncertainty keeps weighing on the Pound.
- UK Manufacturing PMI dropped further in August.
The increasing selling pressure around the Sterling is helping EUR/GBP to clinch daily highs in the 0.9080 region.
EUR/GBP looks to politics, Brexit, data
The British Pound is extending the downside bias since the second half of last week, coming down under extra downside pressure as political jitters have intensified in the UK against rising bets of general elections and a ‘no deal’ outcome at the October deadline.
In fact, the Sterling faces a critical week, including the probability of a no-confidence motion against PM Boris Johnson, ahead of the suspension of the Parliament at some point between September 9-12.
In addition, GBP is deriving extra weakness after the manufacturing PMI dropped to 47.4 for the month of August, the lowest level since October 2012, accentuating the deterioration in this sector.
What to look for around GBP
The recent move by PM Boris Johnson to suspend Parliament has given way to heightened uncertainty in UK politics and boosted odds of a ‘no deal’ scenario on October 31. Supporting this view, opposition MPs seems to be losing the battle to avoid a ‘hard divorce’ while investors have started to factor in the chances of general elections. On another direction, there are no changes nor fresh news from the BoE’s stance towards Brexit. It is worth recalling that, at its last meeting, the central bank refused to incorporate the likeliness of a ‘no deal’ scenario to its projections.
EUR/GBP key levels
The cross is gaining 0.49% at 0.9076 and faces the next hurdle at 0.9148 (21-day SMA) followed by 0.9183 (high Aug.20) and finally 0.9324 (2019 high Aug.12). On the other hand, a drop below 0.9016 (low Aug.27) would expose 0.8891 (monthly low Jul.25) and then 0.8836 (200-day SMA).
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