EUR/GBP testing the June 25 high

EUR/GBP rallied to test the June 25 high of 0.8034, but failed to hold the level and has pulled back to the 80 handle.

Source: Bloomberg

In terms of geo-politics, markets seem to be appeased by comments from Russian President Vladimir Putin, in which he detailed ‘we will do all we can so this conflict comes to end as soon as possible and the bloodshed in Ukraine comes to an end’.

It’s still worth pointing out that the 280 vehicles said to be carrying humanitarian supplies to east Ukraine pose a potential stumbling block, and while a number of vehicles have actually crossed into Ukraine, they have been stopped around 20 km from the border. We shall see if there is any response from the Ukrainian military which could cause risk aversion in markets.

On the economic data front, euro area growth numbers have thrown more concern on the global growth story, with German Q2 GDP contracting 0.2% qoq, taking annual growth to 1.2% yoy. French GDP was moderately better, although was flat for a second month, so it was hardly inspiring. On a more positive note, Spain’s GDP seems to be improving, as does Greece’s, although both these countries are seeing deflation in their economies as well.

The fact EUR/GBP has not fallen through the 80 handle seems testament to the fact the market is already very short of EURs.

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