EUR/GBP remains on the defensive near 0.8420 ahead of BoE, Brexit

EUR/GBP comes under pressure around 0.8420.
The cross rebounds from YTD lows at 0.8385 (Friday).
Focus stays on Brexit deadline on January 31^st.

Pablo Piovano FXStreet

The improved tone in the quid is putting EUR/GBP under extra downside pressure at the beginning of the week in the 0.8420 region.

EUR/GBP now looks to BoE, Brexit

After recording fresh 2020 lows in the 0.8385/80 band on Friday, the European cross met some important resistance at Monday’s tops in the mid-0.8400s, always on the back of the recovery in the sterling and the steady trade in the single currency.

Later in the week, all the attention will be on the BoE interest rate decision on Thursday amidst divided opinions on the likeliness of a rate cut. Indeed, while some investors favour a rate cut against the backdrop of sluggish economic growth and Brexit uncertainty, others expect the ‘Old Lady’ to remain on the sidelines in response to recent better-than-expected data releases.

Apart from the BoE event, the Brexit deadline is on Friday 31^st January. Following this date, frictions between the UK and the EU are predicted to return to the markets as a driving force of the sentiment around the British pound, always against the backdrop of the start of difficult trade negotiations between both parties.

EUR/GBP key levels

The cross is losing 0.09% at 0.8423 and a breakdown of 0.8385 (2020 low Jan.24) would expose 0.8275 (2019 low Dec.13) and then 0.8248 (monthly low July 2016). On the other hand, the next up barrier lines up at 0.8508 (55-day SMA) seconded by 0.8595 (2020 high Jan.14) and finally 0.8628 (100-day SMA).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD strengthens to near 1.3400 as UK political risk fades

The GBP/USD pair gathers strength near 1.3395 during the Asian trading hours on Thursday, bolstered by fading domestic political uncertainty. However, hawkish minutes from the Federal Reserve and renewed tensions between the US and Iran might support the US Dollar and cap the upside for the major pair.

EUR/USD sticks to positive bias above 1.1400 vs USD; Mideast tensions cap gains

The EUR/USD pair attracts some buyers for the second straight day, though it lacks follow-through and remains confined within the previous day's range during the Asian session on Thursday. Spot prices currently trade around the 1.1420 area, up less than 0.10% for the day, and remain at the mercy of the US Dollar price dynamics.

Gold keeps the red despite softer USD; stays below $4,100

Gold trades with a mild negative bias in the Asian session on Thursday, fading the overnight bounce from $4,020, or a one-week low. Minutes of the June FOMC meeting showed an evenly divided debate over the monetary policy outlook and failed to impress the US Dollar bulls, which is supporting Gold. However, fresh US-Iran tensions drive Oil higher, reviving inflation concerns and limiting the USD's downside and the bullion's rebound.

Ethereum: Bulls reclaim dominance, but buying remains weak

Ethereum has slowly seen a return of bullish dominance over the past few days after a lengthy period of bearish pressure. However, buying pressure remains weak despite registering nearly a 10% gain since the beginning of the month.

2.50%: Why the Kiwi's first hike in three years is a wager on a number nobody can see

The Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 25 basis points to 2.50% at 02:00 GMT on Wednesday, its first hike in three years and the moment the bank that cut deeper than any G10 peer last cycle turned to face the other way.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.