EUR/GBP tumbles to lows and threatens to test 0.9100
- EUR/GBP meets further downside pressure near 0.9100.
- EUR-weakness keeps weighing on the cross today.
- PM B.Johnson meets France’s E.Macron.
The selling bias around the single currency is now picking up pace and dragging EUR/GBP to fresh lows in the vicinity of the 0.9100 handle.
EUR/GBP in fresh 2-day lows
The cross is fading Wednesday’s gains and has re-shifted its focus to the key support at 0.9100 the figure on the back of a renewed and quite sharp sell off in EUR.
In fact, the shared currency has quickly reversed the initial optimism after preliminary PMIs in core Euroland are now seen higher for the month of August, somewhat reversing the multi-month downtrend.
On the Brexit front, Chancellor Angela Merkel said an alternative to the Irish backstop is ‘possible within 30 days’ at her meeting with PM Boris Johnson, adding that such an option should come from the UK side.
Further out, PM B.Johnson is now meeting French President E.Macron, who emphasized that the backstop is indispensable.
In the UK docket, the CBI Distributive Trades Survey plummeted to -49 for the current month, coming in below forecasts, of course.
What to look for around GBP
The Sterling is suffering the lack of progress around the Brexit talks while the removal of the ‘Irish backstop’ has now become the conditio sine qua non for any resumption of EU-UK negotiations. On another direction, the BoE kept the monetary conditions unchanged at its last meeting, although it refuses to factor in a ‘no deal’ scenario in its projections for the time being. The BoE still sees a ‘soft Brexit’ outcome and reiterated that rates are seen increasing gradually in order to bring inflation to the bank’s target.
EUR/GBP key levels
The cross is losing 0.32% at 0.9110 and a drop below 0.9088 (low Jul.31would expose 0.9029 (55-day SMA) and then 0.8891 (monthly low Jul.25). On the upside, the next barrier lines up at 0.9190 (10-day SMA) followed by 0.9324 (2019 high Aug.12) and then 0.9411 (monthly high Oct. 2009).