EUR/GBP is trading around 0.8570 on Wednesday, on the front foot as hopes of a de-escalation in the Gulf hand the Euro (EUR) a modest lift.
The pair has broken above its 20- and 100-period moving averages, which sit bunched together near 0.8558 on the 4-hour chart, and is testing the session high in the 0.8574 area
Russian agency RIA Novosti reported on Tuesday that Washington and Tehran had agreed to a ceasefire that would restore free navigation through the Strait of Hormuz, the route that carried about a fifth of the world’s Oil and liquefied natural gas (LNG) before the conflict, with an announcement expected in the coming days. For the energy-importing Euro area, the prospect of calmer shipping lanes and softer fuel costs is a relative positive, and it is helping the single currency edge ahead of the Pound (GBP). Reports that Iran has moved its military doctrine onto a more offensive footing, and that talks with Oman over managing the strait remain on-and-off, are keeping the move measured.
Traders look set to wait for the deal to be confirmed before pricing it in fully. German unemployment figures are due on Friday, with the jobless rate expected to hold at 6.4% in July, ahead of the Eurozone’s August confidence surveys. With the United Kingdom (UK) calendar quiet, Sterling is left to trade off the broader risk mood, leaving the initiative with the Euro for now.