- EUR/GBP drops to the 0.8900 area, near 3-month lows.
- UK GDP came in above estimates today.
- UK Industrial, Manufacturing Production surprised to the upside.
The renewed buying pressure around the Sterling is dragging EUR/GBP to the area of 3-month lows near the 0.8900 handle.
EUR/GBP weaker post-UK data
The European cross comes under renewed and moderate downside pressure on Monday in response to the better tone around GBP and steady/bearish stance from the single currency.
In fact, the British Pound met fresh buying interest after the GDP came in flat in the three months to July and expanded 0.3% on a monthly basis during July.
Adding shine to GBP, Industrial Production expanded at a monthly 0.1% during July, while Manufacturing Production expanded 0.3% inter-month. The Construction Output also bettered consensus, expanding 0.5% from a month earlier and the trade deficit widened to £9.14 billion albeit came in below forecasts.
On this side of the Channel, EUR remains under pressure despite the Sentix index ‘improved’ to -11.1 for the current month.
From the political scenario, UK PM B.Johnson said a no deal ‘would be a failure’ at his meeting with Ireland’s L.Varadkar in Dublin. In addition, the UK Parliament would be suspended on Monday after another vote to call for snap elections later today. However, the government is unlikely to pass the bill, rejecting B.Johnson’s idea to hold elections at some point in mid-October.
What to look for around GBP
Renewed upside momentum is pushing the Sterling to fresh tops in response to today’s auspicious data releases in the UK docket (finally). However, the Sterling is forecasted to remain under scrutiny as political effervescence is far from abated… and a Brexit deal looks still ages away from resolving. All eyes are now on the UK Parliament and another vote to call for early elections next month. On another direction, BoE’s Vlieghe ruled out negative interest rates and talked down the likeliness of a recession.
EUR/GBP key levels
The cross is retreating 0.53% at 0.8919 and a drop below 0.8904 (monthly low Sep.9) would expose 0.8891(monthly low Jul.25) and then 0.8839 (200-day SMA). On the upside, the next hurdle lines up at 0.9054 (55-day SMA) followed by 0.9088 (21-day SMA) and then 0.9148 (monthly high Sep.3).