EUR GBP rate unable to reverse Tuesday's losses; Sterling continues to hold strong

Thursday, 02 February 2012 14:58

Yesterday we saw EUR/GBP try to reverse part of Tuesday’s losses in line with the global rebound of the euro.

However, the move clearly lacked power. Sterling continues to hold strong with the GBP to EUR holding the 1.2 ground.

EUR/GBP was near the recent low just above the 0.8280 mark in Asia and at the start of trading in Europe.

However, European markets succeeded a remarkable risk rally.

This supported the headline EUR/USD cross rate, but the rebound of EUR/GBP was much more contained as cable had a good run, too. The UK manufacturing PMI
showed a bigger than expected rebound from 49.7 compared to 52.1.

However, as was the case of late, the direct impact of UK data on sterling was again very limited.

Global sentiment on the euro and technical considerations prevailed. EUR/GBP even reached an intraday high at 0.8343 after the release of the UK PMI. From there, the pair settled in a tight range roughly around 0.8320.

After all, the pair traded relatively quite given the wide swings in EUR/USD and in equities.

EUR/GBP closed the session at 0.8312, little changed from the 0.8302 on Tuesday evening.

Today, the calendar of eco data in the UK is thin. The PMI of the construction sector is usually no market mover. So, global sentiment and technical considerations will prevail.

Looking at the price action of the previous days, sterling profited almost as much from improving sentiment on the EMU debt crisis than was the case for the single currency.

So, one can expect further range trading in the established consolidation pattern.