EUR/GBP: eyes a break through the 0.8820 towards 200-D SMA
- EUR/GBP: driven higher as cable breaks towards YTD lows.
- EUR/GBP: a great deal now depends on additional UK data and Brexit progress.
EUR/GBP is up through the 100-D SMA at 0.8810. Currently, EUR/GBP is trading at 0.8817, up 0.46% on the day, having posted a daily high at 0.8823 and low at 0.8761.
Cable is weak and is looking in at the 200-D SMA to marry up with YTD lows after a series of UK data has been counteracting the previous hawkish speculation in the market ahead of the BoE's MPC meeting on May 10th.
Where to now?
However, a great deal of the flow has been through the dollar that has also broken its 200-D SMA, to the upside, while the reflation trade is unwound in a less synchronised global growth outlook. For that reason, the euro is also plummeting and it too has penetrated its 200-D SMA while doubts over the ECB policy outlook are pushing the EUR lower, (DXY 92.50).
Elsewhere, politics are a concern for both the UK and Europe and geopolitical tensions are a broader driving factor in the dollar and euro given the current trade policy framework's fragility. PM May's leadership has been put into question while Brexit still struggles towards a positive and soft-Brexit outcome.
For the week ahead, we will have more from the UK ahead of the BoE's MPC meeting on 10th May:
- Wednesday - Construction PMI (expected 50.5, prior 47.0)
- Thursday - Services PMI (expected 53.5, prior 51.7)
- Thursday - Composite PMI (expected 53.7, prior 52.5)
EUR/GBP levels
In a neutral bullish outlook, the 200-D SMA at 0.8880 is the first target in clearing the 100-D SMA that has just been pierced. 0.8800 is now a land in the sand but below there, 0.8760 guards territory to 0.8526 as being the 78.6% retracement of the move from 2017. On a weekly basis, the cross is also neutral on the indicators.