- The cross comes under pressure around the 0.8800 handle.
- UK Retail Sales surpassed estimates during the last month.
- House of Commons could vote on May’s plan on February 27.
The now better tone around the Sterling is forcing EUR/GBP to retreat to the area of session lows in the 0.8800 neighbourhood.
EUR/GBP weaker on GBP-buying
The European cross is fading part of yesterday’s advance and is coming under increasing selling pressure today in response to a pick up in the demand for the British Pound, particularly after earlier results in the UK docket.
Recall that UK Retail Sales surprised to the upside in January, expanding 1.0% MoM and 4.2% on a yearly basis.
In the meantime, another loss of PM May at the Parliament on Thursday barely moved the dial around GBP, as the defeat was largely expected. The following key step regarding the negotiations around the UK-EU divorce will be another vote on a probable variation of May’s plan most likely on February 27.
What to look for around GBP
Another defeat of PM May yesterday passed largely unnoticed among investors. The British Pound is expected to remain under increasing pressure as the clock continues to tick and there is no progress on the horizon (or even any hint of it). So far, consensus among market participants points to a most likely extension of Article 50 in the next weeks or a deal on the 11th hour. However, the Irish backstop issue stays unsolved and a ‘hard’ scenario remains on the table. Adding to this picture, soft inflation figures as of late and prospects of extra deterioration in UK fundamentals should be enough to keep occasional rallies in GBP well capped.
EUR/GBP key levels
The cross is now losing 0.28% at 0.8796 facing the next support at 0.8779 (10-day SMA) followed by 0.8755 (21-day SMA) and then 0.8743 (low Feb.13). On the upside, a breakout of 0.8840 (high Feb.14) would expose 0.8861 (200-day SMA) and finally 0.8884 (55-day SMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.