EUR/GBP recedes from tops near 0.8560, focus on Brexit, May

• The cross adds to Monday’s gains above 0.8500.
• Weekly contention emerged in the 0.8490/85 band.
• MPC member A.Haldane will speak later today.

The Sterling keeps correcting lower in the first half of the week and is now helping EUR/GBP to advance to fresh tops in the 0.8560 region.

EUR/GBP looks to Brexit

The British Pound comes under pressure today on the back of the pick up in the demand for the greenback and some effervescence in the UK political arena.

In fact, PM Theresa May will meet Sir Graham Brady later today against the backdrop of rising pressure on May to step down. In the same direction, Tory associations are expected to hold a confidence vote on May at some point in mid-June, while Brexit cross-party talks will resume this week.

Later today, BoE MPC member A.Haldane will speak at the Sheffield Political Economy Research Institute. On Friday, UK advanced Q1 GDP will be published along with Industrial and Manufacturing Production and Trade Balance figures.

What to look for around GBP

Market participants have now shifted their focus to the meeting between May and Brady and the resumption of cross-party talks under the Brexit negotiations. In the calendar, attention has shifted to the upcoming key releases at the end of the week, with the GDP in centre stage. Latest data releases from the industrial sector and PMI, albeit auspicious, were exclusively driven by companies stockpiling in case of a ‘hard Brexit’ outcome, morphing into a temporary relief for GBP although failing to allay concerns over the outlook on the UK economy and the currency in the longer run. In addition, the current steady stance from the Bank of England appears justified by below-target inflation figures, mixed results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to already rising speculations of a ‘no-hike’ this year.

EUR/GBP key levels

The cross is gaining 0.07% at 0.8557 and a break above 0.8597 (55-day SMA) would expose 0.8681 (high Apr.23) and finally 0.8722 (high Mar.21). On the other hand, the next support lines up at 0.8488 (low May 6) followed by 0.8483 (low Mar 27) and then 0.8471 (2019 low Mar.13).