EUR/GBP testing daily lows near 0.8540

EUR/GBP loses the grip and recedes to 0.8540.
GBP-buying keeps dragging the cross lower.
ECB Accounts coming up next.

Pablo Piovano FXStreet

The sterling is prolonging the daily recovery on the back of USD-selling and is now forcing EUR/GBP to retreat to the area of daily lows around 0.8540.

EUR/GBP offered on stronger quid

The European cross is fading Wednesday’s positive price action and retreats to the 0.8540 area in response to the better momentum surrounding the sterling.

In fact, increased and persistent selling pressure around the buck is lending extra oxygen to the pound, encouraging it to leave behind recent softness stemming from poor data releases in the UK docket and rising speculations on further easing by the Bank of England (via lower interest rates).

Nothing scheduled today in the UK calendar, while on this side of the Channel the ECB is expected to publish its minutes (Accounts) of the December meeting.

Further key data releases include US Retail Sales and the Philly Fed index.

What to look for around GBP

GBP managed to shrug off recent poor domestic data and rumours of a rate cut at some point in the short-term horizon. In addition, the currency is expected to remain under pressure in the next months, as economic and political uncertainty are predicted to re-emerge after the Brexit deadline on January 31^st. Furthermore, extra effervescence between the EU and the UK is almost priced in, particularly when comes to negotiations on the trade front.

EUR/GBP key levels

The cross is losing 0.08% at 0.8544 and a breakdown of 0.8454 (2020 low Jan.8) would expose 0.8275 (2019 low Dec.13) and then 0.7598 (monthly low Jun.24 2016). On the upside, the next resistance lines up at 0.8595 (2020 high Jan.14) followed by 0.8669 (100-day SMA) and finally 0.8780 (200-day SMA).

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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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