EUR/GBP moves to 2019 highs around 0.9200

• EUR/GBP clinches fresh yearly peaks just below the 0.92 mark.
• Renewed EUR buying sustains the up move in the cross.
• UK Services PMI surprised to the upside in July at 51.4.

The continuation of the bid tone around the shared currency is giving renewed wings to EUR/GBP and is pushing it to the 0.9200 neighbourhood, recording at the same time fresh 2019 highs.

EUR/GBP in almost 2-year highs

The European cross regained upside pressure at the beginning of the week, advancing to the very doorsteps of the key barrier at 0.92 the figure in tandem with the persistent buying interest surrounding EUR.

Increasing trade jitters on the US-China front have triggered a renewed risk-off sentiment, which is sustaining the better tone in the safe haven space and supporting the upside in EUR at the same time (via lower USD/JPY).

On the Brexit front, there is no significant news other than rumours of a potential snap election amidst steady bets on a ‘no deal’ scenario on October 31.

In today’s docket, the always-relevant UK Services PMI came in above estimates at 51.4 for the month of July, while Investor Confidence in the euro area tracked by the Sentix Index deteriorated further this month, dropping to -13.7.

What to look for around GBP

The decline in the Sterling appears somewhat exhausted for the time being, 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 Brussels and London. 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 gaining 0.67% at 0.9189 and faces the immediate hurdle at 0.9199 (2019 high Aug.5) followed by 0.9225 (2016 high Oct.7) and finally 0.9306 (2018 high Aug.29). On the other hand, a drop below 0.9088 (low Jul.31) would open the door to 0.9051 (high Jul.17) and then 0.9026 (21-day SMA).