- EUR/GBP adds to gains just below the 0.9100 handle.
- The Queen nods to PM Johnson’s plan to suspend Parliament.
- No-confidence vote, snap elections, hard Brexit among potential scenarios.
The steady tone in the British Pound is motivating EUR/GBP to remain just in the positive territory so far on Thursday around the 0.9080 area.
EUR/GBP looks to politics, data
The European cross is struggling for direction amidst the daily sideline theme in the Sterling and a renewed downside in the single currency.
Recent developments in the UK political arena are expected to keep the Pound well under scrutiny in the very near term. It is worth recalling that the Queen has approved on Wednesday PM B.Johnson’s plan to suspend Parliament until October 14, leaving marginal space to MPs to manoeuvre against a no-deal Brexit.
That said, turmoil among opposition MPs has been on the rise in the last hours while markets have started to factor in several potential scenarios stemming from Johnson’s decision: a no-confidence vote, probable elections, another Brexit delay and, why not, a constitutional crisis.
In the data space, German jobs report came in pretty in line with consensus, while Consumer Confidence in the euro area plunged to -7.1 for the current month. Later in the session, key German flash CPI is also due. Across the Channel, house prices tracked by Nationwide are due tomorrow seconded by BoE’s Consumer Credit and M4 Money Supply figures.
What to look for around GBP
The recent move by PM Boris Johnson has opened the door to extra uncertainty in UK politics and it appears to support further the chances of a ‘hard Brexit’ outcome on October 31, unless there is another call for a Brexit delay. On another direction, the BoE kept the monetary conditions unchanged at its last meeting, although it refuses to factor in a ‘no deal’ scenario in its projections for the time being. The BoE still sees a ‘soft Brexit’ outcome and reiterated that rates are seen increasing gradually in order to bring inflation to the bank’s target.
EUR/GBP key levels
The cross is gaining 0.02% at 0.9071 and faces the next hurdle at 0.9155 (21-day SMA) followed by 0.9183 (high Aug.20) and finally 0.9324 (2019 high Aug.12). On the other hand, a drop below 0.9016 (low Aug.27) would expose 0.8891 (monthly low Jul.25) and then 0.8834 (200-day SMA).
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