EUR/GBP sidelined around 0.8900, looks to UK politics, Brexit

EUR/GBP extends the rangebound around 0.8900.
Brexiteer Boris Johnson keeps leading the race to Number 10.
Uncertainty around UK politics, Brexit keep weighing on GBP.

The broad-based sideline theme in the global markets on Monday is also taking EUR/GBP to extend the consolidative mood around the 0.8900 handle.

EUR/GBP looks to Brexit, UK politics

The European cross is prolonging the rangebound theme in the upper end of the range near 0.8900 the figure, just below recent 5-month peaks in the 0.8950 region.

As usual, UK politics keeps the upper hand when comes to determine the price action around the Sterling. In this regard, former London mayor and Brexiteer Boris Johnson remains the front-runner to succeed Theresa May at Downing Street.

There is no relevant news surrounding the Brexit negotiations other than a ‘no deal’ scenario remains well on the cards, particularly after MPs rejected last week a motion put forward by the Labour Party motion to take control of the Parliament’s timetable.

Later in the week, UK inflation figures are due on Wednesday ahead of the Bank of England event on Thursday.

What to look for around GBP

Heightened uncertainty around the Brexit negotiations and May’s successor keeps the pressure on the Sterling intact for the time being. In the UK economy, recent results from the labour market lent some oxygen to GBP, although the broader softness in fundamentals remain the name of the game. Additionally, the current steady stance from the Bank of England appears justified by below-target inflation figures, downbeat results from key economic fundamentals and somewhat slowing momentum in wage inflation pressures, all adding to speculations of a ‘no-hike’ this year despite some calls signalling a potential hike in November.

EUR/GBP key levels

The cross is gaining 0.08% at 0.8908 and a break above 0.8932 (monthly high Jun.11) would expose 0.9062 (low Jan.11) and finally 0.9092 (2019 high Jan.3). On the other hand, initial support lines up at 0.8871 (low Jun.12) followed by 0.8826 (low Jun.5) and then 0.8778 (200-day SMA).

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