EUR/GBP: bulls targetting the 100-D SMA on break of 21-D SMA
EUR/GBP is better bid at the start of the week as the Italian anti-euro coalition breaks down and Italy fails to form a government. EUR/GBP is currently trading at 0.8782 having made an opening high of 0.8785 from a Friday close of 0.8759.
EUR/GBP had entered the US closing session on Friday on the backfoot and was defensive vs the sharp sell-off from 0.8780 down to 0.8741 the low. Bulls battled their way back to 0.8763 within a rage of 0.8780-0.8741. Besides the political angst in Europe, the 2nd estimate of UK Q1 GDP matched the prior while UK Q1 business investment was a drag on the pound, helping the cross higher. However, the release of better-than-expected UK monthly retail sales data remains a plus for sterling bulls. The latest ONS report showed on Thursday that UK retail sales recorded a strong monthly growth of 1.6% in April.
Italian Prime Minister resigned
Italy's attempt to form government fails as President sides with the Euro - Reuters
For the start of this week, the euro has found some relief on the news that Sergio Mattarella, the president of Italy, vetoed the choice of economy minister, prompting the Prime Minister to resign - euro is bullish on the basis that the coalition is euroskeptic, (EUR/USD opened with a bullish gap of 35 pips).
The cross is building the case for the upside and testing the 21-D SMA at 0.8779 in a constructive correction from the lows of 0.8712 with eyes on the 100-D SMA at 0.8794 ahead of the key rising channel. 0.8820 is the next key resistance guarding the 200-D SMA at 0.8856. To the downside, 0.8620 guards a run towards 0.8526 as being the 78.6% retracement of the move from 2017 on the wide.