• EUR/GBP remains pressured around intraday low after dropping the most in a month the previous day.
• Brexit optimism joins Eurozone energy crisis to weigh on the quote.
• Preliminary PMIs for August hint at downbeat figures but ECB versus BOE mode favor pair buyers.
• Eurozone Consumer Confidence, Russia-Ukraine headlines also become important for fresh impulse.

EUR/GBP holds lower ground near 0.8450 heading into Tuesday’s London open. In doing so, the cross-currency pair extends the previous day’s pullback from the monthly top as traders await flash readings of the August month PMIs for the UK, Germany and the Eurozone.

The quote’s weakness could also be linked to the expectations of positive developments on the Brexit front. “The UK government’s plan to tear up part of its Brexit deal with the EU and replace the Northern Ireland Protocol unilaterally will create a “myriad” of new problems, business leaders have warned,” said The Independent. The news also added that the Northern Ireland Business Brexit Working Group – which includes Logistics UK, CBI NI and Manufacturing NI – said soaring inflation mean there was an “urgent” need for compromise with Brussels.

Also keeping the EUR/GBP sellers hopeful is the energy crisis in the bloc. Russia’s unscheduled maintenance of the Nord Stream 1 pipeline unveiled a blow to the struggling Eurozone economy amid the energy crisis. The fears grew stronger as the firmer US data indicated the Fed’s aggression.

Germany’s monthly report from Bundesbank signaled that a recession in Germany is increasingly likely while also suggesting that inflation will continue to accelerate and could peak at more than 10%. Before that, Bundesbank President, as well as the European Central Bank (ECB) policymaker, Joachim Nagel mentioned that the ECB must keep raising interest rates even if a recession in Germany is increasingly likely, as inflation will stay uncomfortably high all through 2023. On the contrary, German Economy Minister Robert Habeck stated, “A good chance to get through winter without drastic energy measures.”

Moving on, the activity numbers may offer immediate directions but the odds of further downside are minimal considering the European Central Bank’s (ECB) comparatively hawkish stand than the Bank of England (BOE). Also, the first readings of the Eurozone Consumer Confidence for August will be out later in the day and can entertain the EUR/GBP traders.

Technical analysis

The previous resistance line from mid-June joins the support line of the three-week-old bullish channel to highlight 0.8410 as the key level required for the EUR/GBP bear’s entry. Until then, the quote may again attempt to cross the 50-DMA hurdle surrounding 0.8500.