EUR/GBP off daily highs near 0.9170, focused on Brexit
|- EUR/GBP extends further the rebound from the 0.9080 region.
- YTD high emerges just below the 0.9200 handle (Tuesday).
- UK Construction PMI improved to 45.3 in July.
The improved tone around the shared currency is now helping EUR/GBP to extend its rebound from Tuesday’s lows in sub-0.9100 levels.
EUR/GBP looks to UK politics, data
In fact, EUR has gained extra ground via a renewed selling bias hitting the greenback, all exacerbated after Trump announced fresh tariffs on imports of Chinese products late on Thursday.
On the Brexit front, PM B.Johnson’s visit to Belfast on Wednesday yielded no meaningful results, although he encouraged parties to restore the government. At his meeting with local parties, Johnson said his plans are to leave the EU on October 31 with a deal. Additionally, the UK government is now planning to create around 10 free ports across the country once after Brexit.
Back to the UK docket, the Construction PMI improved a tad to 45.3 during July, although still came in short of expectations.
What to look for around GBP
The decline in the Sterling appears somewhat exhausted for the time being, although this does not mean that fears over a ‘no deal’ outcome were dissipated. In the meantime, the Irish backstop remains the exclusive obstacle for the resumption of talks between Brussels and London. On the UK economy, poor results from key fundamentals continue to add to the sour prospects for the economy in the months to come and collaborate further with the bearish view on the currency. At yesterday’s BoE event, the central bank kept the monetary conditions unchanged, although it refuses to factor in a ‘no deal’ scenario in its projections. The BoE still sees a ‘soft Brexit’ outcome and reiterated that rates are seen increasing gradually in order to bring inflation to the bank’s target.
EUR/GBP key levels
The cross is gaining 0.19% at 0.9152 and faces the immediate hurdle at 0.9190 (2019 high Jul.30) followed by 0.9225 (2016 high Oct.7) and finally 0.9306 (2018 high Aug.29). On the other hand, a drop below 0.9088 (low Jul.31) would open the door to 0.9051 (high Jul.17) and then 0.9016 (21-day SMA).
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