Euro dips further against the British Pound, weighed by higher Oil prices

The Euro (EUR) posts mild losses against the British Pound (GBP) on Monday, with the EUR/GBP pair testing Friday’s lows at 0.8560, as the situation in the Middle East muddles and Crude prices tick up, adding pressure on the Eurozone’s Oil-importing economies.

Weapons remain silent in Iran, but an ever-growing confusion surrounds the negotiating process, pushing back hopes of a swift end to the conflict. US President Donald Trump said on Monday that he is “semi-negotiating” with Tehran while Iran affirmed that an agreement with Oman to define new shipping lines through the Strait of Hormuz is near, although the reopening will depend on the US meeting some conditions.

Meanwhile, sea traffic through the key waterway remains reduced to a trickle, and Brent Oil prices returned to levels near $83.00, about 6.5% above last week’s lows.

RaboBank analysts favour buying on EUR/GBP dips

Looking from a wider perspective, analysts at Rabobank see “a re-pricing in policy expectations towards steady policy from the BoE this year combined with the prospect of nervousness ahead of the October budget suggests scope for downside pressure on the pound as the summer draws to a close.”

Against this backdrop, Rabobank reiterates a preference for the Euro over the Pound, stating: “We favour buying EUR/GBP on dips to the 0.8550 area. A break above the recent high in the 0.8588 region could increase upside potential.”

The calendar on Monday is thin, with only the Eurozone Sentix Investors Confidence Index worth mentioning. On Wednesday, Germany’s inflation figures and Thursday’s UK Gross Domestic Product and Eurozone Industrial Production data are expected to confirm the pair’s near-term direction.