- EUR/GBP regains some upside traction.
- Brexit uncertainty stays unabated and weighs on GBP.
- Theresa May is expected to step down on Friday.
The shared currency has regained some shine on Thursday and is now helping EUR/GBP to keep the positive note in the mid-0.8800s.
EUR/GBP looks ECB, data
After two consecutive daily pullbacks, the European cross is now posting some decent gains in the 0.8850 region on the back of a resumption of the buying pressure around the single currency.
In the meantime, the Sterling remains under scrutiny over the rising uncertainty surrounding the Brexit negotiations (or absence of them), while he race to succeed Theresa May in Number 10 keeps driving the sentiment in the UK political scenario.
In today’s docket, final GDP figures in Euroland showed the economy expanded 0.4% inter-quarter during the January-March period and 1.2% on a yearly basis. Later in the day, the ECB is expected to keep its monetary status unchanged amidst a generalized perception of a dovish message overall from Draghi and the Council.
What to look for around GBP
Heightened uncertainty around the Brexit negotiations and May’s successor keeps the pressure on the Sterling intact for the time being. Back to the UK economy, the recent bounce in the activity in the industrial and manufacturing sectors was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ recovery in these sectors. Additionally, 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 speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.
EUR/GBP key levels
The cross is gaining 0.08% at 0.8851 and a break above 0.8902 (monthly high Jun.4) 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 0.8781 (200-day SMA) seconded by 0.8724 (low May 21) and then 0.8668 (55-day SMA).
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