EUR/GBP testing session lows at 0.8940 area
|- EUR/GBP unable to extend beyond 0.9000 dips to test session lows at 0.8940.
- Brexit negotiators’ commitment to giving a fresh impulse to the talks has eased pressure on the GBP.
- Analysts at Credit Suisse suggest a potential bullish triangle formation above 0.9056.
The euro is going through a moderate pullback against the British pound, hovering above session lows at 0.8940 after being rejected near the 0.9000 line on Wednesday’s early European session. The commitment between the UK and EU negotiators to try to find an agreement has eased negative pressure on the GBP, which remains still vulnerable to the UK’s economic data and the BoE’s monetary policy plans.
Hopes of a Brexit agreement bring some relief to the pound
The sterling has regained some ground over the last two days after leaders from the Eurozone and the UK decided to intensify Brexit talks over the coming weeks to reach an agreement. British Prime Minister, Boris Johnson, affirmed that the agreement could be reached in July, which has eased fears of an abrupt exit from the Union in December.
Brexit optimism however has been tamed by lower than expected UK inflation figures, with inflation posting the sharpest contraction since 2016 on the back of plunging demand and lower oil prices. These figures pave the path for the Bank of England to announce a step up on its bond-buying program as it is widely expected to do after its monthly monetary policy meeting, which is due to end on Thursday.
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
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