- EUR/GBP fails to extend gains past 0.9060 and retreats to 0.9030 area.
- The pound ticks up with the investors growing more confident about a UK-EU trade deal.
- Analysts at Credit Suisse see the euro to resuming its uptrend beyond 0.9056.
The euro has been unable to extend beyond the 0.9060 levels and has pulled back to 0.9030 area, turning negative on the day. The pair has lost momentum on Monday after rallying about 1% over the previous two days.
The pound picks up on Brexit deal hopes
The market has welcomed UK PM Boris Johnson’s attempts to secure a trade deal with the EU. Johnson’s meetings with French PM Emmanuel Macron and with the EC President Ursula von der Leyen last week have raised hopes that an agreement is still possible, which has eased negative pressure on the pound. Beyond that, the UK government is expected to ease the COVID-19 restrictions, reducing the social distance rule, which will allow pubs and restaurants to increase their capacities.
On the macroeconomic front, British industrial output has registered its largest quarterly decline on record in the three months to June, which provides new evidence of the COVID-19 impact on the British economy
EUR/GBP to resume the uptrend beyond 0.9056 – Credit Suisse
The FX Analysis team at Credit Suisse sees the current pullback as a corrective reaction ahead of further appreciation beyond 0.9056, “With daily MACD momentum showing further signs of turning higher we maintain our positive bias and continue to look for a clear and sustained move above 0.9056/57 to confirm a bull ‘triangle’ and resumption of the uptrend from March with resistance then seen next at the 50% retracement of the March/April fall at 0.9086 and eventually at the 61.8% retracement at 0.9184.”
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