EUR/GBP struggles for direction below 0.8900 ahead of BoE

EUR/GBP meets support in the 0.8870 region
UK Retail Sales contracted 0.5% MoM in May.
BoE event is coming up next.

Pablo Piovano FXStreet

The weaker note surrounding the greenback is allowing both the Sterling and the shared currency to recover further ground and is prompting EUR/GBP to gyrate around the 0.8880 region.

EUR/GBP steady post-data, looks to BoE

The European cross has come under further pressure this week, retreating from recent multi-month peaks in the 0.8970 region and extending the leg lower to the current multi-day lows in the 0.8880/70 band.

As usual, uncertainty keeps lingering over the UK government, while latest news from the Conservative leader contest noted that only four candidates remain left after Rory Stewart was knocked out yesterday. Once again, Boris Jonhson led ballot with 143 votes. The rest of the candidates are Jeremy Hunt, Michael Gove and Sajid Javid.

In the UK docket, the Sterling has practically ignored today’s mixed results from the calendar, where headline Retail Sales contracted at a monthly 0.5% and core sales dropped 0.3% on a month to May.

Later in the session, the Bank of England event should grab all the attention, despite the probability of significant announces are close to zero.

What to look for around GBP

Rising uncertainty in the UK political scenario is expected to keep the cautious tone in the British Pound, while USD-dynamics emerged as a key driver for the ongoing up move in Cable, although its sustainability remains to be seen. In the UK economy, mixed-to-poor results from fundamentals continue to add to the sour prospects for the economy in the months to come. On another direction, the current steady stance from the Bank of England is seen unchanged and justified by below-target inflation figures and somewhat slowing momentum in wage inflation pressures.

EUR/GBP key levels

The cross is gaining 0.08% at 0.8887 and a break above 0.8974 (monthly high Jun.17) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the downside, the next support is located at 0.8869 (21-day SMA) seconded by 0.8826 (low Jun.5) and then 0.8778 (200-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.

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