Could 0.856 and 0.858 now be in EUR-GBP crosshairs?

We see the latest price action as being part of a rebound in EUR-GBP that could soon take in 0.856.

UK Construction sector back in growth… but no boost for GBP

The pound sterling failed to realise any support from a great data release out of the UK economy today.

The UK's Construction PMI improved from 49.4 to a better than expected 50.8.

Within the sub-indices, residential construction is at its highest level since the peak initial recovery in 2010, but commercial and civil construction continues to remain in mild contractionary territory.
"After upside surprises to the manufacturing and construction PMIs, we are more confident in the Services PMI tomorrow holding onto its recent gains, but still think there is limited upside as it was running ahead of other surveys," says analyst Shaun Osborne at TD Securities.

Euro in broad-based strength - and it's linked to the US dollar

So what is driving the euro pound exchange rate at present? Funnily enough it is actually the US dollar to a large extent.

The US dollar is back in fashion on Tuesday, reversing yesterday’s broad selling in the wake of the weak ISM manufacturing report.

"The EUR has held up well amid the broad bid in the USD, and EUR-USD is currently trading near yesterday’s high. While short term momentum has turned more bullish, in a broader sense, we continue to believe that the risks of a lower EUR-USD are rising. Intraday, 1.3110 (100-day moving average) is the next resistant to watch," says Shaun Osborne.

Camilla Sutton at Scotiabank is however more bullish on the EUR which will have negative implications for GBP:

Sutton says she is forecasting the euro to rise against the US dollar, and this will subsequently likely feed into a higher EUR-GBP exchange rate:

"EUR-USD short‐term technicals: bullish—all signals are in buy territory, with the MACD having crossed last week, the 9‐day breaking bullishly above the 21‐day yesterday, spot reaching a fresh three week high and the RSI shi