- EUR/GBP steps backwards from the intraday high of 0.8992.
- UK’s April month GDP drops 20.4%, Industrial Production shrinks 20.3%.
- Brexit worries, ECB policymakers’ readiness for further stimulus keep buyers hopeful.
- Eurozone Industrial Production, risk catalysts in focus ahead of June meeting between the UK PM Borish Johnson and EU policymakers.
EUR/GBP seems to ignore pessimistic UK data dump for April as it drops to 0.8975 after the release during the early Friday. Even so, the quote keeps the four-day winning streak intact by the press time.
UK’s April month GDP dropped well below -18.4% forecast to -20.4% whereas Industrial Production also lagged behind -15% MoM market consensus to -20.3%.
Read More: UK Manufacturing Production plummets 24.3% MoM in April vs. -15.8% expected
The pair’s declines could be traced to the recently hyped calls that Britain might ease its stand versus the region as far as the Brexit negotiations are concerned.
Amid the on-going Brexit deadlock, the UK PM Johnson will travel the European Union (EU) on June 15. The Tory leader will meet the European Council President Charles Michel and European Commission President Ursula von der Leyen to revive talks on the future EU-UK relationship, as per an EU spokesperson’s announcement cited by Reuters. Recently, the Financial Times (FT) came out with the news that the UK abandons plan to introduce full border checks with the EU on January 1, which in turn might offer the initial positive start to the talks. Though, the British leader is known for his anti-EU nature and love for Brexit, which in turn could make the negotiations tensed afterward.
On the other hand, the ECB policymakers, like Chief Economist Philip Lane, keep favoring the use of all options to revive the economy from the coronavirus shock. Though, the question mark on the future of the Pandemic Emergency Purchase Programme (PEPP) might trouble the pair buyers.
Looking at the risks, the global markets seem to recede on the previous two-day risk aversion moves. While portraying the same, the US 10-year Treasury yields regain 0.70% whereas the US stock futures rise over 1.0% by the press time.
Having witnessed the initial reaction to the UK data dump for April, markets await Eurozone Industrial Production figures, expected -29.5% YoY versus -12.9%, for fresh impetus. It should, however, be noted that the pair’s reaction to news/headlines will be more amid a lack of major data/events left for publishing.
Technical analysis
Unless breaking the monthly trading range inside 0.8865 and 0.9020, the pair remains less interesting to trade. Though, a six-week-old ascending trend line favors the bulls.
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