- The up move in the cross lost momentum near 0.87.
- US-China trade jitters weigh on sentiment.
- MPs will vote on May’s bill next month.
Renewed trade jitters have been putting the riskier assets under further pressure on Wednesday, forcing EUR/GBP to fade part of the recent rally.
EUR/GBP still targets 0.8700
After seven consecutive daily advances, the upside momentum in the European cross is now showing some signs of exhaustion just ahead of the critical barrier at 0.8700 the figure.
US-China trade concerns have re-emerged after some mild respite seen during early trade and keep hurting the risk-associated complex, dragging both the Sterling and the shared currency to daily lows vs. their main competitors.
In today’s calendar, and apart from the trade front, German and EMU advanced GDP figures came in on the weak side for the first quarter, adding to yesterday’s poor readings from the ZEW survey and collaborating with EUR selling.
News around Brexit noted that the deal sponsored by PM Theresa May could be put to the vote early next month regardless of whether the government and the opposition clinch an agreement or not.
What to look for around GBP
Market participants keep looking to cross-party talks between the government and the opposition party, although there is no significant progress yet. Recent publications from the industrial sector somewhat confirmed the rebound seen in the previous months, although the bounce in activity was exclusively driven by companies stockpiling in case of a ‘hard Brexit’ scenario rather than in response to a more ‘genuine’ increase in the sector. In addition, the current steady stance from the Bank of England appears justified by below-target inflation figures, mixed results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to already rising speculations of a ‘no-hike’ this year.
EUR/GBP key levels
The cross is losing 0.03% at 0.8678 and faces immediate contention at 0.8622 (21-day SMA) followed by 0.8598 (55-day SMA) and then 0.8488 (low May 6). On the upside, a surpass of 0.8691 (high May 14) would expose 0.8722 (high Mar.21) and finally 0.8794 (200-day SMA).
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