EUR/GBP bounces off 6-month lows, approaches 0.8600

The Sterling is correcting lower following Monday’s advance and is also helping EUR/GBP to regain some poise and trade closer to the key barrier at 0.8600 the figure.

EUR/GBP looks to politics, unfazed by ZEW

Despite the softer tone in the quid on Tuesday, the renewed and moderate selling pressure in the euro is now undermining the positive momentum around the European cross, which has so far met strong hurdle in the 0.8600 neighbourhood.

Both the euro and the pound are suffering the recovery in the greenback on the back of higher yields and increasing optimism on the US-China trade front. Regarding the latter, President Trump will speak later today and he could probably unveil further details on the current progress of the negotiations around the ‘Phase One’ deal.

Back to the UK elections, the Conservative Party remains in the lead as per the latest poll results, while the positive effects on the quid following N.Farage’s comments on Monday continue to fade away.

Data wise today, the key ZEW survey showed the Economic Sentiment improved in both Germany and the broader Euroland this month, although it remains within the negative territory. On the other side of the Channel, the labour market report came in on a mixed tone: while the jobless rate tocked lower to 3.8% in the three months to September, both the Claimant Count Change and the Average Earnings +Bonus came in short of expectations at 33.0K and 3.6%, respectively.

EUR/GBP key levels

The cross is advancing 0.02% at 0.8584 and faces the next hurdle at 0.8619 (21-day SMA) seconded by 0.8667 (78.6% Fibo of the May-August rally) and then (0.8676 (high Oct.24). On the flip side, a breach of 0.8557 (monthly low Nov.11) would expose 0.8488 (monthly low May 6) and finally 0.8474 (2019 low Mar.12).