EUR/GBP regains traction and tests 0.8950, multi-day highs
- EUR/GBP adds to recent gains and clinches 0.8950.
- The offered bias in Sterling provides support to the cross.
- Boris Johnson faces rising opposition to become PM.
The now selling bias around the British Pound is lifting EUR/GBP to the area of 4-day highs in the mid-0.8900s.
EUR/GBP looks to 0.9000
After meeting decent support in the 21-day SMA around 0.8880 in past sessions, the European cross managed to attract some buying interest and is now climbing for the third session in a row.
GBP and EUR are now shedding some ground today along with the rest of the riskier assets on the back of the renewed demand for the greenback.
Nothing happens on the Brexit side, while there seems to be building up quite a decent opposition against former London mayor Boris Johnson to become the next Prime Minister, all adding extra uncertainty to the UK political scenario. It is worth recalling that the race to Number 10 will be between Johnson and Jeremy Hunt.
What to look for around GBP
Rising uncertainty in the UK political scenario is expected to keep the cautious tone in the British Pound, while USD-dynamics emerged as the exclusive driver for the recent price action in Cable, although its sustainability remains to be seen. In the UK economy, mixed-to-poor results from fundamentals continue to add to the sour prospects for the economy in the months to come. On another direction, the overall tone from the BoE appears to have shifted towards a more neutral (dovish?) gear, while uncertainty around Brexit is seen as the main obstacle in determining the next move on rates.
EUR/GBP key levels
The cross is advancing 0.39% at 0.8952 and a break above 0.8974 (monthly high Jun.17) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the other hand, the next support is located at 0.8872 (low Jun.20) followed by 0.8826 (low Jun.5) and then 0.8778 (200-day SMA).