EUR/GBP remains sidelined around 0.8760

EUR/GBP extends the consolidative fashion in the mid-0.8700s.
UK’s Consumer Confidence came in below estimate at 33 in April.
US NFP expected to drive the sentiment later in the session.

Pablo Piovano FXStreet

The prevailing side-lined mood around the sterling and the single currency are supporting the consolidative note in EUR/GBP in the 0.8750/60 band at the time of writing.

EUR/GBP focused on data, BoE, Brexit

EUR/GBP is prolonging the inconclusive price action for yet another session on Friday, always against the backdrop of the generalized absence of direction in the global markets.

The quid faced some volatility after the BoE left unchanged its monetary conditions at its meeting on Thursday. In addition, the central bank reiterated it could relax further the current stance should the outlook deteriorates in response to the predicted sharp contraction of the economy in the next couple of quarters.

Data wise today, the UK Consumer Confidence tracked by GfK came in at -33 for the month of April, missing consensus although a tad better than March’s -34. Closer to home, German trade surplus shrunk to €12.8 billion during March, showing an important contraction in both exports and imports amidst the coronavirus crisis.

What to look for around GBP

The recovery in the British Pound appears to have met quite a significant barrier around the 1.2600 neighbourhood vs. the greenback (200-day SMA) and the 0.8860 area vs. the euro (April peaks). Moving forward, the sterling is expected to remain under pressure against the backdrop of rising scepticism over the handling of the coronavirus crisis by the UK government and the potential re-opening of the economy, all amidst the forecasted deep recession the country is expected to face in the first half of the year. Further weakness is expected to hit the quid over the prospect of hard UK-EU trade negotiations and the tangible probability that the BoE could pump in extra stimulus.

EUR/GBP key levels

The cross is losing 0.02% at 0.8759 and a drop below 0.8670 (monthly low Apr.30) would expose 0.8653 (100-day SMA) and then 0.8595 (monthly high Jan.14). On the upside, the next hurdle is located at 0.8863 (high Apr.6) seconded by 0.9019 (monthly high Oct.20 2019) and then 0.9324 (2019 high Aug.12).

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.

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