EUR/GBP extends the retreat from 3-week tops, UK PM May eyed

The bid tone behind the pound keeps growing bigger, as we progress towards the mid-European session, knocking-off the EUR/GBP cross below the key support located near 0.8950/40 zone.

EUR/GBP: Losing sight of 0.90 handle

The cross in EUR/GBP reversed course and fell for the first time in ten days, now heading for a test of 0.89 handle, after the pound rallied hard on the upward revision to the UK’s employment inflation data by the ONS. UK’s ONS corrects Q2 unit labor costs to 2.4% y/y from 1.6% previous estimate

Moreover, the latest reports citing that the UK PM May will tell lawmakers on Monday that she was offering Europe a “new, deep and special partnership” with Britain, also remains one of the key reasons behind the GBP surge and EUR/GBP sell-off.

Meanwhile, on the EUR-side of the story, markets ignored upbeat German industrial data and Eurozone Sentix gauge, as the sentiment around the cross remains purely driven by the GBP dynamics.

All eyes now remain on the UK PM Theresa May’s speech scheduled at 14.30GMT for fresh trading impetus on the prices.

EUR/GBP Technical Set-up  

EUR/GBP broke below 0.8949/40 (100 & 5-DMA), with 0.8911 (Hourly 100-SMA) still guarding 0.8900 (round number) and a break back below 0.8880 (10-DMA) are key near-term downside areas. To the topside, a break above 0.8970 (daily pivot) could open doors towards 0.9000 (key resistance).