With the release of stronger UK Construction PMI, sentiments around sterling are solid prompting EUR/GBP to test the daily lows near 0.8430. Also pound remains boosted by the positive comments of “soft Brexit” from senior officials. On the other hand, euro remains pressurized to the downside due to the political instability in the Euro-zone owing to Italy referendum on Sunday. Right now the pair is struggling for direction and is expected that it will seek its immediate support now at 0.8420.
After touching its four and a half month low of 0.8310 on the back of Italy referendum “No Vote” the pair turned upside again yesterday. Despite of the strong UK services PMI the pound remains lower versus the euro. This was due to the fact that investors clearly did not view the “No Vote” as the vote on EU membership. Also increase of German bond yields against the US yields led to rise in the major pair of euro. The next major move for the pair will be decided after the ECB meeting due on Thursday. Till then, the pair is expected to take immediate support near 0.8400 levels.
Euro is rolling over against most pairs as we speak, few other things its cheaper to borrow Euro at the CB rate which is helping it bounce , the Italian election was mostly priced in that's why the reversal . Thursday will be interesting indeed.
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