- EUR/GBP remains pressured around intraday low, snaps two-day uptrend.
- UK’s NIP Bill crosses the first hurdle to become a law despite EU’s warnings.
- ECB Forum appears the key event of the week, risk catalysts, Lagarde’s speech are important too.
EUR/GBP holds lower ground near the intraday low around 0.8620 heading into Tuesday’s European session. In doing so, the cross-currency pair ignores downbeat sentiment, as well as the risk-negative headlines concerning Brexit, as the US dollar rebound weighs on the regional currency.
British policymakers in the House of Commons voted in favor of the Northern Ireland Protocol (NIP) Bill late Monday. Even if the NIP has multiple hurdles to cross before becoming legislation, the European Union’s (EU) trade warnings make the latest passage a grim event for the GBP/USD traders. “Despite some fierce criticism, lawmakers voted 295 to 221 in favor of the Northern Ireland Protocol Bill, which would unilaterally overturn part of Britain's divorce deal from the EU agreed in 2020. The bill now proceeds to line-by-line scrutiny,” said Reuters.
The Brexit move appears a political play to defend UK Prime Minister (PM) Boris Johnson’s position after criticism of the patygate scandal, as well as the Conservatives’ defeat in the recently held two parliamentary by-elections.
On the other hand, the US Dollar Index (DXY) rebounds from a one-week low to 104.00 amid the market’s sour sentiment, as well as amid firmer US Treasury yields.
That said, the US 10-year Treasury yields dropped 1.9 basis points (bps) to 3.17% by the press time. The benchmark US bond coupons rose during the last two consecutive days.
Moving on, speeches from the Bank of England’s (BOE) Deputy Governor for Financial Stability Sir Jon Cunliffe and the European Central Bank (ECB) Governor Christine Lagarde will be important to watch for clear intraday directions, not to forget updates concerning the UK politics and Brexit. However, Wednesday’s ECB Forum is the key as major central bankers from the BOE and the Fed are scheduled to debate the monetary policies.
Technical analysis
Successful trading above an upward sloping support line from mid-April, near 0.8580 by the press time, keeps EUR/GBP buyers hopeful.
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