EUR/GBP steady above 0.9000, pushing against 0.9050 resistance area
|- EUR/GBP crawls beyond 0.9000 and tests three-month highs above 0.9055.
- The pound suffers on the back of ballooning UK public debt and Brexit fears.
- Analysts at Credit Suisse suggest a potential bullish triangle formation above 0.9056.
The euro remains bid against the pound, which is depreciating across the board on the back of a surging government borrowing and the lingering fears about a no-deal Brexit. The euro has taken advantage of GBP weakness, to extend Tuesday’s rebound from 0.8912 to nearly three-month highs at 0.9072.
Government borrowing and Brexit hurt the pound
British government borrowed £55.2 billion in May, which is about nine times the amount borrowed 12 months before and shows the strong impact of the coronavirus shutdown in the UK economy. These figures put Britain’s public debt above the country’s output for the first time since 1963. Beyond that, the lingering concerns about the possibility of a no-deal Brexit, as a senior French minister suggested today, remains weighing on the GBP.
Alternatively, the euro has been buoyed by hopes about the outcome of the European leaders’ discussions about the €750 billion fund to support coronavirus hit countries, although the possibility of a breakthrough has been delayed, at least, until July.
EUR/GBP likely to build a bullish triangle pattern above 0.9056 – Credit Suisse
In a bigger picture, the FX Analysis team at Credit Suisse sees the pair biased higher, likely to shape a bullish triangle pattern on a break of 0.9056 resistance, "Resistance is seen at 0.8997 initially, then 0.9025/28, above which should clear the way for a move back to the recent high and ‘measured base objective’ at 0.9056/57. Above here is needed to confirm a bull ‘triangle’ and resumption of the uptrend from March with resistance then seen next at the 50% retracement of the March/April fall at 0.9086 and eventually at the 61.8% retracement at 0.9184.”
EUR/GBP key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.