- EUR/GBP trims initial gains and returns to 0.9150.
- BoE left the monetary conditions unchanged at its meeting.
- UK Retail Sales came in below estimates in February.
The recovery in the sterling continues to undermine the monthly rally in EUR/GBP, which is now navigating the mid-0.9100s after climbing well above 0.9200 the figure during early trade.
EUR/GBP focused on data, BoE
EUR/GBP keeps looking for a clear direction in the second half of the week following two consecutive daily pullbacks, all amidst the better mood surrounding both the sterling and the single currency on the back of persistent weakness in the dollar.
No news from the BoE earlier in the session, as it left the refi rate and the asset purchase facility unchanged at 0.10% and £645 billion, respectively, matching the broad consensus.
The BoE noted it remains ready to expand the ongoing asset purchases in order to support the economy and to prevent further tightening of financial conditions. Additionally, the central bank sees inflation picking up pace following a significant depreciation of the quid in the longer run.
In the UK docket, UK headline Retail Sales contracted at a monthly 0.3% and 0.5% when comes to Sales excluding the Auto sector, both readings missing forecasts. Closer to home, the German Consumer Climate tracked by GfK dropped to 2.7 for the month of April, coming in short of estimates.
What to look for around GBP
The British Pound keeps correcting higher so far this week, bouncing off levels last seen in times of the Plaza Accord in 1985 vs. the greenback and multi-month lows vs. the euro during last week. The extra stimulus from the Fed and the US government lent oxygen to the sterling and has been sustaining the recovery in past sessions. However, the quid is expected to remain under the microscope in light of the upcoming EU-UK trade negotiations, while shaky UK fundamentals plus the impact of the coronavirus on the domestic and global economy open the door to the palpable possibility that the country could slip into recession in the near future.
EUR/GBP key levels
The cross is losing 0.14% at 0.9136 and a drop below 0.9054 (weekly low Mar.25) would expose 0.8994 (low Mar.20) and then 0.8930 (21-day SMA). On the flip side, the next resistance lines up at 0.9499 (2020 high Mar.19) seconded by 0.9649 (monthly high January 2009) and then 0.9804 (monthly high December 2008).