EURGBP Pairs Early Gains After Stronger UK Construction PMI
EURGBP is steady in the morning trading session after the substantial gains yesterday that drove the price above 0.85. The British pound was under selling pressure after PM Johnson introduced a hard line in the negotiations with the EU after the Brexit. Johnson repeated that the UK would not follow the EU’s rules and regulations after the departure.
In the economic data the United Kingdom Construction PMI came in at 48.4 topping the expectations of 46.6 in January. The previous reading was at 44.4. The positive news support GBP the last hour, as the pair approaches the daily lows.
The European Monetary Union Producer Price Index came in at 0% in line with forecasts in December. The yearly reading came in at -0.7% also in line with forecasts.
I expect the volatility in EURGBP to continue as the negotiations progress and uncertainty stays high. The initial optimism that boosted GBP after the December elections appears to be fading as both parts take a hard stance ahead of the talks.
EURGBP breached yesterday above the 0.85 resistance, while today the attempt to higher-level rejected at 0.8537. Buyers returned to the pair afte the break above the 50-day moving average and now a close above the 0.85 mark might initiate another leg higher.
On the upside, first resistance for the EURGBP pair will be met at 0.8537 the daily high. The next resistance level stands at 0.8565 the high from January 16th. A move above that level will face the next resistance at 0.86001 the 100-day moving average.
On the other side, the immediate support for the pair stands at 0.8487 the daily low. Next support level for the EURGBP would provide the yesterday’s treding session low at 0.8406. A credible break below might open the way for a move down to 0.8300 the low from December 16th.