EUR/GBP clings to modest gains, holds steady above 0.9100 post-Eurozone/UK PMIs
- EUR/GBP continued gaining traction for the fourth consecutive session on Friday.
- The already stronger euro got an additional boost from upbeat Eurozone PMI prints.
- The GBP bulls remained on the defensive amid renewed fears of a no-deal Brexit.
The EUR/GBP cross held on to its modest gains through the early European session and was last seen hovering near the top end of its daily trading range, around the 0.9125 region.
The cross built on this week's strong bounce from the key 0.9000 psychological mark and gained some follow-through traction for the fourth consecutive session on Friday. The uptick could be attributed to the euro's relative outperformance, led by the latest optimism over the EU's agreement on €750 billion pandemic recovery fund.
The shared currency was further underpinned by Friday's mostly upbeat Eurozone PMI prints. The preliminary release showed that the German manufacturing sector returned to expansion in July and the gauge jumped to a 19-month high level of 50.0. Adding to this, the Eurozone Manufacturing PMI improved to 51.1 and the Services PMI jumped to 55.1 in July.
On the other hand, the British pound struggled to gain any meaningful traction despite Friday's upbeat UK macro releases. The UK monthly retail sales came in to show a growth of +13.9% for June as against +8.0% expected and +12.0% previous. The core retail sales (excluding auto fuel sales) stood at +13.5% MoM as compared to +7.5% expected and +10.2% previous.
Separately, the flash version of the UK PMI prints showed that both, the manufacturing and services sector activities quickened its pace of expansion in July. The data, however, failed to impress the GBP bulls amid renewed concerns about a no-deal Brexit, especially after the latest round of negotiations ended on Thursday without any major breakthrough.
The EU's chief Brexit negotiator accused the UK government of being “unwilling to break the deadlock” and warned that a Brexit deal is “unlikely”. Meanwhile, Britain's chief Brexit negotiator David Frost added that the UK should be prepared for all scenarios for the end of the transition period on December 31, including the possibility that a deal will not be reached.
From a technical perspective, a sustained move beyond weekly swing highs, around the 0.9135 region, will be seen as a fresh trigger for bullish traders. This, in turn, should pave the way for a move back towards June monthly tops, around the 0.9175 zone, before bulls eventually aim to reclaim the 0.9200 round-figure mark.
Technical levels to watch