EUR/GBP pulling back below the 0.8800 level

• Investors are expecting the Bank of England to leave rates unchanged on Thursday.
• Eurozone ’s Sentix index came below expectations at 19.2 in May while German factory orders decelerated to -0.9% month-on-month in March. 

The EUR/GBP is trading at around 0.8792 down 0.55% on Monday as the common European currency suffered relatively larger losses to the US Dollar compared with Sterling.

The EUR/GBP lost some ground in the early European session as the Eurozone’s Sentix index missed expectations in May with the headline reading of 19.2 while the German factory orders fell -0.9% month-on-month in March. The recent trend in the macroeconomic data in the Eurozone keeps disappointing.

The UK markets are closed for May Day and the Eurozone macroeconomic calendar is rather light on the first day of the week. Coming up next in the US session is the European Central Bank’s Praet speech at 16:30 which is not expected to be a major market moving event.

However, the main event for Sterling this week is scheduled for Thursday with the Bank of England monetary policy meeting accompanied with the release of the quarterly Inflation Report which will reveal the Bank's monetary policy outlook in light of the UK's macroeconomic framework. It will be followed by the press conference with Mark Carney, the Bank of England Governor. Following the streak of poor macroeconomic data in the UK and dovish comments from BoE’s officials, investors are expecting the Bank to leave interest rates unchanged at 0.5% and the £435 billion asset purchasing program unchanged as well. In fact, some analysts forecast the next BoE rate hike possibly in fall of this year.

The GBP also suffers from the political tensions regarding Brexit and the Irish border issue. Theresa May is trying to revive customs plans which had been strongly rejected by eurosceptics last week.

EUR/GBP 4-hour chart

The trend is bullish and resistances are priced in at the 0.8840 supply level and at the 0.8900 figure while supports are seen at the 0.8782 and 0.8682 swing lows