- The pound is losing momentum as the stock markets continue to recover.
- Concerns weigh on GBP as BoE Bailey warns banks to plan Brexit without agreement.
EUR / GBP rises Wednesday after falling in the previous two days. It hit a low of 0.8865 on Tuesday, the lowest since May 15, and at the time of writing is hovering around 0.8920. A few minutes ago climbed to 0.8931, the highest in two days.
Data released Wednesday showed that final euro area values for the Markit PMI service sector were slightly above initial estimates, but still showed a dramatic contraction in economic activity. In addition, in the United Kingdom, the PMI has been revised upwards to 29.
In the UK, the Governor of the Bank of England, Bailey, has warned banks to strengthen plans for a Brexit without a trade deal. British Prime Minister Johnson’s spokesman later said that, despite the outcome of the Brexit negotiations, the United Kingdom will leave the EU single market. The stalemate in negotiations is likely to continue to limit gains in pounds sterling.
As far as the euro is concerned, market players are currently focusing on two things: the meeting of the European Central Bank on Thursday and the negotiations around the European Commission’s recovery plan.
On the upside, the immediate resistance of EUR / GBP stands at 0.8930. A consolidation above 0.8930 would pave the way for further gains, targeting 0.8960. On the other hand, below 0.8880, downward pressure should increase, exposing 0.8850.