EUR/GBP struggles for direction near 0.8900

EUR/GBP adds to yesterday’s losses near the 0.8900 area.
GBP trades on a bid bias and keeps the cross under pressure.
Brexit woes, UK political uncertainty remains unchanged.

Pablo Piovano FXStreet

The continuation of the recovery in the Sterling is dragging EUR/GBP back to the 0.8900 neighbourhood on Wednesday.

EUR/GBP looks to risk trends, Brexit

The European cross is posting the second consecutive session with losses so far today against the backdrop of an improved sentiment in the risk-associated complex and persistent USD-weakness.

On the Brexit front, latest news cited the Labour Party could try to impose a motion later today to prevent the future PM to introduce legislation favouring the UK to leave the EU without a deal.

Still in the UK, but on the political front, former London mayor Boris Johnson remains the front-runner to take over Number 10 in the next weeks.

What to look for around GBP

Heightened uncertainty around the Brexit negotiations and May’s successor keeps the pressure on the Sterling intact for the time being. In the UK economy, recent results from the labour market lent some oxygen to GBP, although the broader softness in fundamentals remain the name of the game. Additionally, the current steady stance from the Bank of England appears justified by below-target inflation figures, downbeat results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.

EUR/GBP key levels

The cross is losing 0.04% at 0.8894 and faces initial contention at 0.8826 (low Jun.5) seconded by 0.8780 (200-day SMA) and finally 0.8724 (low May 21). On the other hand, a break above 0.8932 (monthly high Jun.11) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3).

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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