- EUR/GBP extends the rally above the 0.90 mark.
- GBP-selling gives further wings to the cross.
- UK jobs report came in mixed earlier in the day.
The increasing selling pressure around the British Pound has now lifted EUR/GBP to fresh multi-month peaks beyond 0.90 the figure.
EUR/GBP boosted by GBP-weakness
The European cross is up for the second consecutive session on Tuesday, managing well to break above the multi-session consolidative pattern and finally leaving behind the critical 0.9000 handle.
The Sterling gained extra downside pressure today following the sharp rebound in the greenback and mixed reports from the UK labour market. In fact, the jobless rate stayed put at 3.8% and Claimant Count Change ticked higher by 38.0K during June. On another side, the key Average Earnings Index +Bonus expanded more than expected 3.4% during May.
On the Brexit front, candidates to succeed Theresa May, Boris Johnson and Jeremy Hunt, left the ‘no deal’ scenario well on the table on Monday after deeming the North Ireland backstop as ‘dead’
What to look for around GBP
Rising uncertainty in the UK political scenario plus rising chances of a Brexit ‘no deal’ are expected to keep the downside pressure on the Sterling well and sound for the foreseeable future. In the UK economy, poor results from key fundamentals continue to add to the sour prospects for the economy in the months to come and collaborate further with the bearish view on the currency. On another direction, the overall tone from the BoE appears to have shifted towards a more dovish gear, while markets have started to price in the likeliness of a rate cut at some point in Q3/Q4.
EUR/GBP key levels
The cross is gaining 0.42% at 0.9031 facing the next hurdle at 0.9042 (monthly high Jul.16) seconded by 0.9062 (high Jan.11) and finally 0.9092 (2019 high Jan.3). On the other hand, a break below 0.8955 (21-day SMA) would expose 0.8872 (low Jun.20) and then 0.8826 (low Jun.5).
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