EUR/GBP: consolidates the bid as Sterling bulls play catch up
- EUR/GBP stabilising as GBP catches up on the bid on dollar weakness.
- GBP politics concerning but less so to NY traders.
EUR/GBP is consolidating the bid while the US tax plan takes centre stage yet again and sends the dollar lower across the board on the possibility of delays in the corporation tax breaks until 2019. Currently, EUR/GBP is trading at 0.8850, up 0.11% on the day, having posted a daily high at 0.8880 and low at 0.8824.
Senate tax plan meets $1.5 trillion federal deficit ceiling for tax legislation - Reuters
Meanwhile, and domestically, the pound had been struggling to keep up with its peers who were improving broadly against the USD. "Grounds for softness reside in the mounting political problems for PM May, with events undermining her authority just as the government restarts Brexit talks. EU forecasts suggest that UK economic growth will slow in 2018 (to 1.3%, from 1.8% this year), even if the UK’s trade relationship with the EU remains unchanged," explained analysts at Scotiabank.
However by the NY shift, all those concerns seemed to teeter off, and the consensus is that PM May will not resign. She is to appoint new aid minister and is seeking to maintain delicate Brexit balance.
"EUR/GBP is starting to again see some recovery but will need to tackle and overcome the short term downtrend at 0.8922 to confirm further upside potential to 0.8940 the 55-day ma and then the 0.9034 12th October 2017 high, where we suspect that it will struggle," explained analysts at Commerzbank, adding, "below .8723 would target the .8530/78.6% retracement of the move seen this year. Near-term rallies should find decent resistance at .8840/80 (38.2% and 50% retracements of last leg down."