EUR/GBP rebounds at 0.9060, rises back above 0.9100

EUR/GBP erased most of the day’s losses and rose back above 0.9100. The pair rallied during the American session and remained near session highs after a van crashed in Barcelona, killing at least 13, on a terror attack. 

Catalan govt. official: 13 dead, at least 50 injured in Barcelona van attack

EUR/GBP headed for another close above 0.9100

The euro is about to post the third daily close in a row slightly above 0.9100. Currently trades at 0.9115/20, marginally lower for the day, but far from the lows, signaling that while the upside in the short-term is having difficulties to break above 0.9140/50, the downside lacks momentum. 

The first round of data on Thursday came from the UK with the retail sales report. In July rose 0.3%, above the 0.2% expected. It was the second monthly gain in a row. Then came the final reading of Eurozone inflation data for July. The headline was unchanged from the flash estimate at -0.5%, while the core rate dropped 0.6% (vs -0.5% previously reported). 

UK July retail sales arrive at 0.3% m/m vs 0.2% expected

The pair continued to move slowly to the downside after the economic numbers and tumbled following the release of the minutes from the latest European Central Bank meeting. The Governing Council expressed concern over the appreciation of the euro, pointing toward risks of overshooting. It offered no clear clues about the next steps. “Today’s minutes fit into the picture of an ECB which wants to steer and moderate the process towards tapering extremely cautiously”, said Carsten Brzeski, Chief Economist at ING. The next meeting will be September 7. 

ECB Minutes: headline inflation slightly lower than previously expected

EUR/GBP rebounded at 0.9060 and moved constantly to the upside, regaining 0.9100, amid a recovery of the euro and risk aversion. The Dow Jones was falling 1%, at 21,810 at the lowest in two weeks. 

Levels to watch 

To the downside, the immediate support is now seen at 0.9100, followed by 0.9060: a break below the last one could trigger a more significant correction. On the upside, above 0.9125 the euro could rise to test year-to-date highs at 0.9140/45; a break higher could open the doors for a rally toward 2016 highs located at 0.9190/95.

EUR/GBP expected to remain above 0.90 in the near term – Danske Bank