EUR/GBP trades flat around 0.8450, eyes BoE, Brexit

The softer tone in both the quid and the single currency keeps EUR/GBP within a narrow range near 0.8450 on Wednesday.

EUR/GBP now looks to BoE, Brexit

The European cross has faded the initial spike to the daily highs around 0.8465, where sits the 10-day SMA, and it has returned to the familiar range in the mid-0.8400s.

In the meantime, the sterling remains under pressure against the backdrop of rising rumours that the ‘Old Lady’ could reduce the policy rate at Thursday’s event despite some positive results from the UK docket as of late.

Back to Brexit galaxy, the European Parliament will vote later in the afternoon on the withdrawal agreement before the UK leaves the European Union on Friday.

Earlier in the session, German Consumer Climate improved to 9.9 for the month of February according to GfK. On the other side of the Channel, house prices gauges by the Nationwide index rose 0.5% inter-month in January and 1.9% from a year earlier, btoh prints coming in above estimates.

What to look for around GBP

The British pound has come under renewed downside pressure in past sessions on the back of the USD-rally and renewed concerns on the Brexit front. In the meantime, investors’ attention remains on the upcoming Brexit deadline (January 31^st) and the subsequent key trade negotiations with the European Union, which will surely bring in volatility and effervescence to the cross. In addition, rising speculations of a probable rate cut by the BoE as soon as on Thursday keep GBP-bulls at bay for the time being.

EUR/GBP key levels

The cross is losing 0.04% at 0.8454 and a breakdown of 0.8385 (2020 low Jan.24) would expose 0.8275 (2019 low Dec.13) and then 0.8248 (monthly low July 2016). On the other hand, the next up barrier lines up at 0.8478 (weekly high Jan.28) seconded by 0.8503 (55-day SMA) and finally 0.8595 (2020 high Jan.14).