EUR/GBP: on a round hourly trip back to key resistance at 21-hr SMA

• The pound was sold off on the news that EU's Barnier rejected the UK's latest offer.
• Dips back will find initial support at the 200-day ma at 0.8818 and the 55-day ma at 0.8808.

EUR/GBP has moved up from the lows of 0.8864, supported by the 21-D SMA at 0.8867 inline with the rising support from 20th June's business down at 0.8725 as sterling falls away from the 1.32 handle vs the greenback.

The pound has been rejected at the channel resistance as the dollar picks up a bid despite disappointing US data. Global trade continues to dominate, (NAFTA at finishing stages of a deal) while the ECB having laid the cards out at the last meeting. The pound was sold off on the news that EU's Barnier rejected the UK's latest offer ahead of the next round of talks in mid-August while UK parliament enters 6 weeks of recess. 

There were four important takeaways from the ECB Press Conference: (Nick Kounis, analysts at ABN AMRO offered the following key takeaways from the ECB). 

1. First of all, the ECB remains confident in its positive outlook for economic growth. ECB President Draghi said the central bank judged that economic indicators were stabilising, and were at levels consistent with solid economic growth. Still, it sees ‘prominent’ risks due to the rise of protectionism.
2. Second, the ECB slightly upgraded its language on inflation, saying that ‘domestic cost pressures are strengthening and broadening amid high levels of capacity utilisation and tightening labour markets’, with ‘broadening’ being the new element.
3. Third, despite its confidence that inflation will rise, Mr. Draghi emphasised that ‘significant monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term’. Indeed, he validated market expectations for an autumn 2019 rate hike, which drove government bond yields and the euro lower.
4. Finally, the ECB did not discuss reinvestment policy or even when to discuss it, though the ECB President noted that the capital key had to be respected. This seems to rule out the possibility that the proceeds of maturing bonds in one jurisdiction will be reinvested in other.

EUR/GBP levels

Analysts at Commerzbank explained that EUR/GBP failed recently just ahead of the 0.8967 March high and the 0.8964 50% retracement: 

"We are looking for a small pullback at this stage. This is viewed as just corrective. Dips back will find initial support at the 200-day ma at 0.8818 and the 55-day ma at 0.8808. Above 0.8967 will target the 0.9034 October 2017 high. Dips lower will find initial support at 0.8808, the 55-day ma. This guards the 0.8779 uptrend, then 0.8717, the 15th June low. While above here we will assume that it stays bid."