Political upheaval pressures euro

The EUR/GBP trade has been stuck in a tight range, lacking the momentum or indeed any real confidence in the single currency to break above the £0.8600 level.

The better-than-expected UK services PMI, in simpatico with the renewed political crisis in Portugal which has driven the country’s ten-year bond yield rise to 7.6% and fears that Greece will not receive the next tranche of its bailout, is adding pressure to the euro.

With the short-term RSI oversold, we could see a bounce back to £0.8510 before a more protracted southward move.

Right now, the £0.8490 level is providing a degree of support for EUR/GBP, with £0.8470 the key level to watch. A break and close below this will open up the way for a test of the £0.8400 levels and the 200-day moving average.

EUR/GBP (DFB) Spot FX chart

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