EUR/GBP trades within a tight range above 0.9200

• EUR/GBP navigates within a narrow range above the 0.9200 mark.
• EUR, GBP on a sideline mode amidst the broad-based consolidation.
• Friction between MPs and Government rises on ‘no deal’ option.

Both the Sterling and the shared currency are following the generalized consolidation in the global markets, motivating EUR/GBP to keep business aobe the 0.9200 handle, all within a tight trading range.

EUR/GBP looks to Brexit, data

The European cross is navigating without a clear direction in the second half of the week, reflecting the broad-based cautious tone in the global assets amidst the ongoing ‘flight-to-safety’ stance.

On the Brexit front, the British Pound is alternating gains with losses in response to escalating frictions between some MPs and the Government, always gyrating around the likeliness of a ‘no deal’ outcome, while there is still no fresh news on the Irish backstop.

There is nothing scheduled today in both the European and UK dockets, while UK advanced Q2 GDP figures will be the salient event tomorrow along with German trade balance results.

What to look for around GBP

The price action around the Sterling appears consolidative below the 1.22 handle for the time being, showing the lack of a clear bias among investors although this does not mean that fears over a ‘no deal’ outcome were dissipated. In the meantime, the Irish backstop remains the exclusive obstacle for the resumption of talks between London and Brussels. Back to the UK economy, the positive print from the Services PMI today did nothing to allay concerns over the broad-based poor performance from key fundamentals in the last months, keeping the sour prospect for the economy unchanged in the months to come and collaborate further with the bearish view on the currency. At last week’s BoE event, the central bank kept the monetary conditions unchanged, although it refuses to factor in a ‘no deal’ scenario in its projections. The BoE still sees a ‘soft Brexit’ outcome and reiterated that rates are seen increasing gradually in order to bring inflation to the bank’s target.

EUR/GBP key levels

The cross is retreating 0.04% at 0.9216 and a drop below 0.9088 (low Jul.31) would open the door to0.9061 (21-day SMA) and then 0.9051 (high Jul.17). On the flip side, the next up barrier is located at 0.9249 (2019 high Aug.6) followed by 0.9306 (2018 high Aug.29) and finally 0.9411 (monthly high Oct. 2009).