EUR/GBP: technicals lean bearish, bears target the 10-D SMA
- EUR/GBP has been down to test the 200-hr SMA at 0.8890 with a low scored at 0.8886 from a high of 0.8927 as the pound catches a bid across the board.
- PM May's comments boost pound when she said that she will take control of Brexit negotiations while Parliament now take a six-week summer recess which could give rise to a lift in the pound in the absence of further Brexit headlines.
- Technicals lean bearish, targetting the 10-D SMA.
PM May's confidence has lifted the spirits of sterling bulls and the Bloomberg headlines helped to offset the UK's Brexit Secretary Dominic Raab's comments:
"Britain will “thrive” in the event of a “no deal” divorce from the European Union,"
which he told MPs during a tense and at times fiery evidence session at a House of Commons committee Tuesday.
EZ soft patch continues
From Europe, Nick Kounis, an analyst at ABN AMRO explained that the eurozone PMI surveys suggested that the soft patch in the eurozone economy was continuing into Q3: "The composite output index (a tracker of GDP growth) slipped to 54.3 in July from 54.9 in June. That is above the low of 54.1 in May but below the elevated levels (around 58) seen at the turn of the year. At current levels, the indicator is consistent with economic growth of 0.4% qoq, which is roughly around trend. A fall in the services PMI (54.4 from 55.2) offset a modest rise in the manufacturing PMI (55.1 from 54.9)."
BoE now the main focus, but US GDP could also be key
Meanwhile, the odds are back near 70% for the August the 2nd's meeting for a hike - according to BOEWATCH and that too has been underpinning the pound despite all of the Brexit angst that has been working against it of late and considering the potential media blackout on Brexit headlines, that should now remain at the fore. eyes will now turn to the US GDP on Friday and anything there less than expected could be a major boost for sterling despite the UK's recent polling that was showing that there is a growing opposition to PM May's soft Brexit plan.
EUR/GBP levels
On the daily sticks, the series of higher highs were sold into at the top of the ascending channel resistance which left the bull's hopes of a test of 0.8980 unacted. the technicals have turned bearish and further below the spot price, the 10-D SMA is closer than it was yesterday that opens the 200 and 21-D SMAs which guard the bearish 0.8720 triangle lows and the double bottom lows at 0.8697. 0.8620 protects a run towards 0.8526 as being the 78.6% retracement of the move from 2017 on the wide. However, on continued Brexit angst, the 0.9034 October 2017 high on the wide will come in as the key upside target.