EUR/GBP eases to levels near 0.8700 amid mild risk-off markets

EUR/GBP retreats towards 0.8700 but remains within the previous days' ranges.
The Euro remains near one-month highs after rallying more thn 1% over the last three weeks.
ECB-BoE monetary policy divergence is keeping EUR/GBP's downside attempts limited.

Guillermo Alcala FXStreet

The Euro (EUR) is trading lower against the British Pound (GBP) on a calm week opening, with most markets closed on Easter Monday, and markets wary of risk, amid greater concerns about an escalation of the war in Iran. The pair is trading at 0.8720 at the time of writing, down from session highs at 0.8735, yet still within the last few days’ trading range.

Investors are holding their breath following fresh threats by US President Donald Trump to destroy Iran’s bridges and energy plants if Tehran does not open the Strait of Hormuz before Tuesday at 8 PM.

Earlier in the day, however, a report by Axios suggested that a group of regional mediators is negotiating a 45-day ceasefire that could lead to a peace deal. This has contributed to easing risk aversion somewhat, but Trump's mixed messages on the war are keeping traders on edge.

ECB-BoE monetary divergence

From a wider perspective, the pair is consolidating near one-month highs, as the Euro has shown greater resilience than the Pound amid the month-long war in the Middle East. The higher inflationary pressures have prompted European Central Bank (ECB) policymakers to suggest that a rate hike is coming, while BoE Governor Andrew Bailey played down the chances of any near-term monetary tightening.

In the calendar on Monday, the main focus will be on the Eurozone Sentix Investor Confidence index, which is likely to show the impact of the Iran war and the energy shock on institutional investors’ confidence. This reading is unlikely to provide any significant support to the common currency.

Economic Indicator

Sentix Investor Confidence

With among 1600 financial analysts and institutional investors, the Sentix Investor Confidence is a monthly survey which shows the market opinion about the current economic situation and the expectations for the next semester. The index, released by the Sentix GmbH, is composed by 36 different indicators. Usually, a higher reading is seen as positive for the Eurozone, that means positive, or bullish, for the Euro, While a lower number is seen negative or bearish for the unique currency.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD trims losses, back above 1.1500

EUR/USD picks up some pace and bouces off earlier lows, reclaiming the 1.1500 threshold and beyond at the end of the week. The pair’s modest pullback follows a persistent risk-averse market mood and renewed buying interest for the US Dollar.

Gold: The $4,000 mark holds the downside for now

Gold faces renewed selling pressure, falling sharply toweard the $4,000 mark per troy ounce as the US Dollar regains momentum. Escalating US-Iran tensions are keeping inflation concerns and expectations of further Fed rate hikes alive, weighing further on the yellow metal.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Warsh needs to restore his reputation

We were glad to see our deeply negative reaction to the Warsh press conference was not some personal peculiarity. Just about everybody in the financial press felt the same way. The consensus is building it’s not the Fed in the dog-house but only Warsh. Today the WSJ changed it tune and blasted Warsh—"the honeymoon is already over..”

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.