EUR/GBP upside met tough resistance

5 June, 2019

EUR/GBP comes down after testing the 0.8900 handle. UK PM Theresa May will step down on Friday. Brexit uncertainty remains unabated.

After testing fresh 5-month tops in the 0.8900 neighbourhood on Tuesday, EUR/GBP sparked a correction lower to the current 0.8870/65 band.

EUR/GB focused on Brexit, government

Despite Tuesday’s negative price action, the European cross keeps the 5-week positive streak unabated so far this week, always bolstered by the renewed and strong pick up in the buying interest around the shared currency.

On the GBP-side, the ongoing rebound in the Sterling is more linked to USD-weakness than anything else, while the domestic front remains dominated by rising uncertainty over the potential successor of Theresa May at Downing St, stalled Brexit negotiations and rising bets on a ‘no deal’ scenario.

In the data space, German and EMU final services PMIs surprised to the upside, while Producer Prices came in below expectations in May. In the UK docker, the always-relevant services PMI improved a tad to 51.0 during last month, surpassing estimates.

EUR/GBP key levels

The cross is gaining 0.12% at 0.8871 and a break above 0.8902 (monthly high Jun.4) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the flip side, the next down barrier aligns at 0.8782 (200-day SMA) seconded by 0.8724 (low May 21) and then 0.8665 (55-day SMA).

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