EUR/GBP oscillates above 0.8600 on downbeat UK fundamentals, ECB Minutes eyed

• EUR/GBP extends three-week uptrend during Monday’s quiet Asian session.
• Tories eye another attempt to oust UK PM Boris Johnson, BCC survey highlights recession fears.
• Bulls seek ECB’s hawkish bias after witnessing record EU inflation.

EUR/GBP justifies downbeat British fundamentals while stretching the previous three-week uptrend to 0.8620 during Monday’s Asian session. In doing so, the cross-currency pair also takes clues from the increasing hawkish bets on the European Central Bank’s (ECB) July rate hike.

Having failed to remove UK Prime Minister (PM) Boris Johnson in their first attempt, the Conservative Party members eye another effort to oust the British leader, as signaled by the UK Telegraph. The news mentioned, “Opponents of the Prime Minister will try to overhaul 1922 Committee rules so that another leadership challenge can be triggered immediately.”

Elsewhere, the latest survey from the British Chambers of Commerce (BCC) mentioned that 54% of more than 5,700 companies it surveyed between May 16 and June 9 expected turnover to increase over the next 12 months. This is down from 63% in the previous survey and the lowest share since late 2020, when many businesses were under some form of COVID restrictions, per Reuters. The news also stated, “British companies have turned increasingly glum about the outlook, with inflation surging and investment plans looking stagnant.”

On the other hand, the Financial Times (FT) stated that the ECB to discuss blocking banks from multibillion-euro windfall as rates rise. It’s worth noting that the bets on the ECB’s 50 basis points (bps) rate hike in July are on the rise of late, which in turn propels the EUR/GBP buyers ahead of this week’s ECB Minutes, up for publishing on Thursday.

That said, Monday’s German Trade Balance for May can entertain intraday traders amid a likely sluggish session due to the US holiday.

Technical analysis

Although fundamentals are in favor of the EUR/GBP bulls, Friday’s gravestone Doji candlestick hints at the pullback towards a seven-week-old support line of 0.8580.