- EUR/GBP trades with a downward bias and tests the 0.92 area.
- Economic Sentiment in Germany and the euro area surprised to the upside.
- UK’s labour market report came in on a positive note.
The selling bias in the greenback is lending fresh legs to both the euro and the sterling, while EUR/GBP is slipping back to the vicinity of the 0.92 support, where some decent contention seems to have turned up.
EUR/GBP focused on Brexit, data
The broad-based positive note in the risk complex along with the renewed sell-off in the dollar are sustaining the demand for the riskier assets on Tuesday.
Against this, EUR/GBP is losing ground for the second session in a row, adding to Monday’s losses although still navigating above the key support at 0.92 the figure, as market participants seem to prefer the quid to the single currency for the time being.
However, the British pound is expected to face increasing headwinds in the next weeks, all stemming from the unabated uncertainty around the EU-UK Brexit negotiations and the still (very) probable no-deal outcome.
Earlier in the UK docket, the monthly labour market report came in on the strong side, while the Economic Sentiment in the euro area and Germany also surprised markets to the upside for the current month.
What to look for around GBP
The sterling appears to have regained some poise following the recent sharp pullback. While dollar dynamics are usually seen behind occasional bouts of upside momentum in the quid, the currency faces increasing risks from the domestic scenario, namely the dovish stance from the BoE, downside risks to the economic outlook from the coronavirus crisis and the omnipresent concerns around Brexit talks.
EUR/GBP key levels
The cross is losing 0.21% at 0.9212 and a breach of 0.9200 (weekly low Sep.14) would expose 0.9148 (monthly high Jul.27) and finally 0.9030 (55-day SMA). On the flip side, the next hurdle emerges at 0.9291 (monthly high Sep.11) followed by 0.9324 (2019 high Aug.12) and then 0.9499 (2020 high Mar.19).
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