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Forex

EURGBP sheds recent strong gains, moves lower to 0.9160

GKFX | Jul. 31, 2019
EURGBP sheds recent strong gains, moves lower to 0.9160

The recovery in the British Pound is forcing EURGBP to give away part of its recent strong gains and move lower to the 0.9160 area.

31 July 2019, GKFX – The European cross is so far reversing four consecutive sessions with gains, coming down from recent 2019 highs in levels just shy of the key 0.9200 the figure on Tuesday.

The rally in the cross has picked up strong upside traction in response to rising concerns among investors of a Brexit ‘no deal’ scenario. This view has been exacerbated after Boris Johnson – a know Brexiteer – was elected new UK PM early last week.

Back to Brexit negotiations, GBP remains under intense pressure and stays vigilant on today’s visit of PM B.Johnson to Belfast amidst ongoing friction between the UK and EU on the Irish backstop.

Closer to home and in the data space, earlier releases in Germany saw Retail Sales rebounding sharply during June and the unemployment rate staying put at 5.0%. In the broader euro area, advanced Core consumer prices failed to surprise markets to the upside and are expected to rise 0.9% YoY during the current month. Additionally, the economy of the bloc is seen expanding 0.2% QoQ in Q2 and 1.1% on a yearly basis.

Moving forward, the Federal Reserve is expected to cut rates by 25 bps at today’s meeting, while the BoE is seen keeping its monetary stance on hold tomorrow.

What to look for around GBP

The Sterling remains under heavy selling pressure and it has quickly dropped to multi-month lows vs. both USD and EUR on rising fears of a Brexit ‘no deal’.

Investors’ attention has now returned to UK politics amidst rising bets of a ‘no deal’ scenario, while any progress in the negotiations between London and Brussels is expected to exclusively gyrate around the Irish ‘backstop’ issue.

Back to the UK economy, poor results from key fundamentals continue to add to the sour prospects for the economy in the months to come and collaborate further with the bearish view on the currency. On another direction, the overall tone from the BoE appears to have shifted towards a more dovish gear, while markets have started to price in the likeliness of a rate cut at some point in Q3/Q4.

EURGBP technical analysis

The cross is retreating 0.21% at 0.9160 and a breach of 0.9051 (high Jul.17) would expose 0.9002 (21-day SMA) and then 0.8891 (monthly low Jul.25). On the upside, the next barrier emerges at 0.9190 (2019 high Jul.30) seconded by 0.9225 (2016 high Oct.7) and finally 0.9306 (2018 high Aug.29).

Disclaimer

This article was provided by analysts at GKFX. The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you, then this should be solely at your discretion, and GKFX will not be held accountable in any way.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official policy or position of AtoZ Markets.com, nor should they be attributed to AtoZMarkets.