EUR/GBP basing at 0.8490, correcting on sterilng weakness

Currently, EUR/GBP is trading at 0.8540, up 0.62% on the day, having posted a daily high at 0.8550 and low at 0.8495.

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EUR/GBP is recovering from the slide from 0.8720 resistance down to 0.8490 with cable on the backfoot. Sterling was a strong performer from the 1.21 handle in the middle of last month's business but is now stalling. Brexit concerns will drive the price with each significant headline while at the same time. The UK economy will be scrutinized in respect to the value of the pound and inflationary pressures while the BoE may be forced into a hawkish position in due course. However, today's Manufacturing Purchasing Managers Index (PMI) released in London was a miss and perhaps the weak pound has not been so beneficial as markets might have thought. This came in as 54.2 vs. the 55.1 expected and 54.6 prior.

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"Last week's CFTC data show that the short is finally shrinking, but is still huge. That probably leaves us in no man's land for a while longer but we still like EUR/GBP longs for the long run, pairing two ‘cheap' currencies and buying the one that isn't sticking pins into a wax image of its economy," explained Kit Juckes, an economist at Societe Generale.

EUR/GBP levels

EUR/GBP: a neutral/negative bias - Commerzbank

Analysts at Commerzbank explained that the outlook for EUR/GBP in the near term is negative: "The market last week failed at the 5-month resistance line at 0.8720 and the emphatic rejection from here has eroded the 55 and 200-day ma."