EUR/GBP on the defensive around 0.8400 ahead of Brexit
- EUR/GBP manages to regain some traction near 0.8380.
- The sterling remains bid and drags the cross lower.
- EMU flash CPI, GDP failed to surprised markets.
The continuation of the buying interest around the quid is forcing EUR/GBP to recede further ground and briefly test the area of 2020 lows near 0.8385.
EUR/GBP offered on GBP-strength
The European cross is posting losses for the third consecutive session at the end of the week, always in response of the moderate improvement in the sentiment surrounding the British pound.
In fact, GBP regained extra oxygen after the Bank of England left its monetary stance unchanged at Thursday’s meeting, all amidst a pretty divided consensus regarding a probable interest rate cut. However, the central bank failed to rule out further easing in the coming periods in order to keep supporting growth and domestic prices.
On another front, the UK will leave the European Union at 2300 GMT on Friday.
Also supporting the sterling, earlier results from the UK docket came in above expectations: the BoE’s Consumer Credit expanded to £1,218 billion in December and Mortgage Approvals ticked higher to 67.24K during the same period.
Closer to home, flash prints from the EMU CPI and Q4 GDP failed to surprise markets on the positive side, leaving the single currency somewhat exposed.
What to look for around GBP
The British pound has regained some shine in the wake of the BoE event on Thursday. Investors’ attention is now on the Brexit front, where tough negotiations around a trade deal with the European Union are expected to bring in renewed frictions between both parties and fresh volatility to the currency.
EUR/GBP key levels
The cross is losing 0.14% at 0.8411 and a breakdown of 0.8385 (2020 low Jan.24) would expose 0.8275 (2019 low Dec.13) and then 0.8248 (monthly low July 2016). On the other hand, the next up barrier lines up at 0.8487 (weekly high Jan.30) seconded by 0.8498 (55-day SMA) and finally 0.8595 (2020 high Jan.14).