EURGBP attempts to stabilize after the recent correction as economic data from the UK failed to impress investors.
UK GDP Beat Forecasts
Office for National Statistics (ONS) reported earlier today that the UK economy contracted by 20.4% in the 2Q of the year, after a contraction of 2.2% in the 1Q. The figure came slightly better than analyst’s estimates of a 20.5% contraction. UK GDP contraction came worst than the Eurozone as the GDP has contracted by 12.1% in the second quarter.
Yesterday the UK employment data came mixed as the furlough program continues to cover the real figures. The June ILO unemployment rate came down to 3.9% better than analyst’s expectations of 4.2%. The unemployment reading for May was at 3.9%. The employment change for June came in at -220,000 below the estimates of -300,000. The previous month reading was at -125,000.
The positive tone from the BoE since the last policy meeting the previous week will continue to support the British Pound. However, the deadlock in Brexit negotiations might have a negative impact and put pressure on the Pound. UK Finance Minister Sunak said that there is progress in some areas of Brexit negotiations, but there are gaps on a couple of critical issues. Sunak also noted that extending the Brexit transition period would not be the right thing to do.
EURGBP Price Analysis
EURGBP is 0.07% higher at 0.9002, but the common currency still faces the resistance at the 50-day moving average, which has proven a stiff hurdle the last two weeks. Failure to break above would signal a correction to the 0.89 mark.
Immediate resistance for the EURGBP pair stands at 0.9005 the daily high. Above that, the 50-day moving average, as I mentioned above, would provide the next obstacle. In case of a break higher would pave the way for 0.9136 the top from July 28.
On the other side, intraday support is at 0.8984 today’s low. More bids would emerge at 0.8923 the 100-day moving average. If the pair breaks that level, then bears would be in control targeting 0.8823 the low from May 15.