EUR/GBP advances to 2020 highs near 0.8570
- EUR/GBP moves higher to the 0.8570 region.
- UK Industrial/Manufacturing Production disappoint.
- UK monthly GDP came in at -0.3% in November.
The selling pressure around the sterling is now picking up extra pace and is helping EUR/GBP to clinch fresh multi-week highs in the 0.8570 area.
EUR/GBP boosted by UK data
The European cross is posting gains for the third session in a row and trades in fresh 3-week highs in response to the continuation of the downside momentum around the British pound.
Indeed, the quid is suffering the poor results from the UK calendar, where the monthly GDP showed the economy contracted 0.3% during November. Further data showed the Industrial Production and Manufacturing Production contracted 1.2% MoM and 1.7% MoM, respectively, during the same period. On the brighter side, the trade deficit shrunk sharply to £5.26 billion, also in November.
Later in the day, the NIESR GDP Estimate is due ahead of key inflation figures and the Autun Budget on Wednesday, the BoE’s Credit Conditions Survey on Thursday and Friday’s Retail Sales.
What to look for around GBP
The sterling is expected to remain under pressure in the next months, as economic and political uncertainty are predicted to re-emerge after the Brexit deadline on January 31st. In fact, further effervescence between the EU and the UK is almost priced in, particularly on the trade front. In addition, speculations that the Bank of England could announce some kind of stimulus (lower interest rates) if the economic outlook deteriorates further later in the year are also seen weighing on the currency.
EUR/GBP key levels
The cross is gaining 0.58% at 0.8560 and faces the next hurdle at 0.8576 (2020 high Jan.13) seconded by 0.8591 (high Dec.23) and finally 0.8684 (100-day SMA). On the flip side, a breakdown of 0.8454 (2020 low Jan.8) would expose 0.8275 (2019 low Dec.13) and then 0.7598 (monthly low Jun.24 2016).