EUR/GBP remains firm around 0.8900, focus on Brexit, Payrolls
|- EUR/GBP extends the choppy trade around 0.8900.
- The Pound navigates a thin range ahead of key US data.
- The EU remains sceptical regarding Johnson’s proposal.
Both the Sterling and the shared currency are trading within a tight range at the end of the week, prompting EUR/GBP to regain some lost poise and advance to the 0.89 neighbourhood.
EUR/GBP focused on Brexit, US Payrolls
The European cross is navigating the familiar range so far on Friday, while EUR and GBP remain on a cautious mood ahead of the publication of the always-critical US labour market.
On the Brexit front, the recent upside momentum in the Sterling has subsided a tad today after EU’s D.Tusk poured cold water over the (exaggerated?) optimism in the markets following the Brexit proposal from PM B.Johnson. Tusk said earlier that the EU remains ‘open but not convinced’.
Absent any releases and events on both sides of the Channel, markets’ attention will be on the US Non-farm Payrolls and the speech by Chief J.Powell at the ‘Fed Listens’ event.
What to look for around GBP
The EU’s response to PM B.Johnson’s proposal for the Irish backstop has been cautious so far, prompting the Sterling to give away part of the recent moderate gains. While the negotiation between both parties is expected to continue in the next days, and on another side, BoE’s (former hawk) M.Sunders stressed the likelihood of a rate cut if the UK economic outlook worsens regardless of the Brexit outcome. His view could keep rallies in GBP somewhat limited for the time being and carries the potential to spark a division in the central bank’s ranks, as the ‘Old Lady’ remains reluctant to factor in a probable ‘hard Brexit’ into its projections.
EUR/GBP key levels
The cross is gaining 0.19% at 0.8903 and faces the initial hurdle at 0.8936 (monthly high Oct.1) seconded by 0.8971 (100-day SMA) and then 0.9004 (38.2% Fibo of the May-August rally). On the flip side, a drop below 0.8829 (200-day SMA) would expose 0.8785 (monthly low Sep.20) and then 0.8667 (78.6% Fibo of the May-August rally).
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