- The rangebound mood stays unchanged around the cross.
- GBP remains stuck amidst low volatility and absent Brexit news.
- UK PM May ruled out a Cabinet reshuffle.
Today’s inconclusive performance of the Sterling coupled with a better mood around the shared currency is taking EUR/GBP to the 0.8650/60 region, prolonging at the same time the multi-session consolidative theme.
EUR/GBP focused on risk trends, Brexit
The European cross is up for the second session in a row at the beginning of the week amidst the generalized volatility and lack of significant headlines from the Brexit front.
Latest news from across the Channel said UK PM Theresa May failed to push for a Cabinet reshuffle following the recent announcement of a delay in the Article 50 until October 31.
On this side, EUR is seeing some respite following last week’s sell off in response to poor prints from advanced manufacturing PMIs for the current month.
In the data space, the German IFO survey is due on Wednesday while there will be no relevant publications in the UK calendar.
News from the speculative community saw investors turning GBP net longs for the first time since June 12 2018 during the week ended on April 16, as per the latest CFTC report.
What to look for around GBP
Brexit negotiations are expected to be the dominant driver for volatility and price action around the Sterling in the months to come. Recent positive data from the industrial sector and PMI were exclusively driven by companies stockpiling in case of a ‘hard Brexit’ outcome, morphing into a temporary relief for GBP although failing to allay concerns over the outlook on the UK economy and the currency in the longer run. In addition, the current steady stance from the Bank of England appears justified by below-target inflation figures, mixed results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to already rising speculations of a ‘no-hike’ this year.
EUR/GBP key levels
The cross is advancing 0.07% at 0.8658 and faces the next hurdle at 0.8680 (high Apr.17) seconded by 0.8722 (high Mar.21) and finally 0.8753 (100-day SMA). On the downside, a break below 0.8630 (55-day SMA) would expose 0.8601 (21-day SMA) and then 0.8502 (low Apr.3).
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