EUR/GBP upside still capped by 0.8850
|- EUR/GBP now consolidates just below 0.8850.
- Speculations run high over the next UK PM.
- Potential ‘no deal’ scenario stays well on the cards.
The offered tone around the Sterling remains well and sound for yet another week, although it seems insufficient to push EUR/GBP further north of the key resistance at the 0.8850 region.
EUR/GBP looks to Brexit, UK government
The British Pound continues to suffer the absolute confusion surrounding the UK government, which has been exacerbated since Theresa May announced she will leave Number 10 on June 7. Since that moment, candidates to succeed her have been only piling up, with no clear front-runner for the time being.
Also weighing on GBP, there are no fresh (nor old) developments coming from the Brexit negotiations, where latest news still refers to the victory of Brexiteer N.Farage’s Brexit Party at the recent EU parliamentary elections.
Adding to the chaotic domestic scenario in the UK, the US-China trade tensions continue to keep the global sentiment under pressure, with the risk-associated complex in the centre of the storm.
In the data space, recent German gauges of climate and the labour market have disappointed expectations, therefore adding extra downside pressure to the European currency.
EUR/GBP key levels
The cross is gaining 0.01% at 0.8819 and a break above 0.8850 (monthly high May 24) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the flip side, the next down barrier aligns at 0.8786 (200-day SMA) seconded by 0.8724 (low May 21) and then 0.8638 (55-day SMA).
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