EUR/GBP: retains the bid so far, but is euro out of steam?

Currently, EUR/GBP is trading at 0.9054, up 0.28% on the day, having posted a daily high at 0.9064 and low at 0.9024.

EUR/USD stuck below 1.18, where to next?

EUR/GBP has made fresh highs in recent trade and is looking comfortable around 0.9050. Markets are pricing out some of the previous hawkishness from the BoE while expecting something more from the ECB this year. At the same time, the Fed is not looking or sounding as convincing and that too has helped boost the euro to fresh highs. 

However, a key factor in the EUR rally in recent weeks, as noted by analysts at Scotiabank, are narrowing Eurozone-US spreads that remain unchanged (10Y gap at –177bps) which the analysts suggest means that the EUR rally is running on fumes, or something else beyond fundamentals (political risk).

EUR/GBP levels

Analysts at Commerzbank noted that EUR/GBP has eroded the 61.8% retracement (circa .8987) of the move down from the October 2016 spike high and broken higher towards 0.9059, the highs from mid-October 2016:

"Above here lies the 0.9082/85 2011 high and introduces scope to the .9170 78.6% retracement. The market will now stay immediately bid above the 0.8743 14th July low. Initial support is the 0.8849 near term uptrend," explained the analysts at Commerzbank.