EUR to GBP climbs to two-week highs after strong economic data from Europe and fears of a no-deal Brexit. The eighth round of negotiations starts today as we are approaching the October 15 deadline. Germany’s Finance Minister Scholz said earlier today that the latest signals from the United Kingdom do not raise any hopes for a Brexit deal.
Better Than Expected Economic Data From Europe Lifts Euro
The European Monetary Union Gross domestic product shrank by 11.8% in the second quarter better than expectations of -12.1%. The yearly reading came in at -14.7% also better than expectations of -15% in the second quarter. The steep contraction was mainly due to the coronavirus lockdown in the second quarter. The contraction in the first quarter was -3.7%
Positive news also came from Italy, where the Retail Sales in July came in at -2.2% above the forecasts of -5.5%.
Germany Exports came at 4.7%, below the forecasts of 5% in July, while the France Exports, reported at €35.54B in July above the June reading of €32.4B.
ECB Decision on Thursday Will Drive EURGBP
European Central Bank (ECB) will announce its monetary policy decision on Thursday with expectations to keep interest rates unchanged to record low levels, and for more stimulus to support the economic recovery while has to deal with a strong EUR and inflation drop below the zero levels. Euro has jumped from below the 1.10 mark against the U.S. dollar to 1.18 pressuring the fragile European Monetary Union economy.
EUR to GBP Price Analysis
EUR to GBP managed today to return above the 0.90 mark in a strong move that breached above the 50-day moving average. The pair started the previous week a strong rebound from two-month lows, breaking yesterday above the 100-day moving average and today accelerates the upward move.
Bulls are in control of EUR to GBP now and would face the resistance at 0.9045 today’s high. The next hurdle stands at 0.9068 the high from August 20. The next supply zone would be met at 0.9137 the top from July 28.
On the downside, intraday support for the pair is at 0.9013 the 50-day moving average. If the pair settles below, the next support would be met at 0.8956 the daily low and the 100-day moving average. Bears would regain control for the short term below the 100-day moving average and might challenge 0.8867 the low from September 3.
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EUR to GBP Price Daily Chart