EURGBP TECHS: Monitoring Support Around The 50-Day EMA

• RES 4: 0.8769 High Jul 28 and the bull trigger   
• RES 3: 0.8744 High Aug 7 
• RES 2: 0.8728 76.4% retracement of the Jul 28 - Aug 14 bear leg
• RES 1: 0.8713 High Sep 2  
• PRICE: 0.8653 @ 16:30 BST Sep 10
• SUP 1: 0.8636/8597 50-day EMA / Low Aug 14 and the bear trigger
• SUP 2: 0.8562 50.0% retracement May 29 - Jul 28 upleg 
• SUP 3: 0.8540 Low Jun 30 
• SUP 4: 0.8514 61.8% retracement May 29 - Jul 28 upleg

EURGBP traded lower Tuesday and has breached the 20-day EMA. Short-term weakness is considered corrective - for now - and support to watch lies at 0.8597, the Aug 14 low. Clearance of this level would reinstate a recent bearish threat. A resumption of gains would open 0.8744, the Aug 7 high. Key resistance and the bull trigger is at 0.8769, the Jul 28 high. Note that MA studies are in a bull-mode position highlighting a dominant uptrend.

EGBs and Gilts traded in mixed fashion Wednesday, with underperformance at the short end of respective curves.

• While Gilt yields remained within this week's ranges throughout the day, 10Y Bund yields touched an intraday post-Aug 7 low in early trade as markets digested overnight news of Poland downing Russian drones in its territory.
• Lower-than-expected inflationary pressures in the US producer price report saw a brief rally across global core instruments, but EGBs and Gilts were content to drift into the cash close ahead of event risk Thursday.
• The German curve twist flattened on the day, with the UK's bear flattening.
• OAT spreads were little changed albeit underperformed periphery/semi-core EGBs more widely, following overnight news that French President Macron had named centrist/ex-defence minister Lecornu as the new Prime Minister.
• While US CPI will garner significant attention, Thursday's European highlight is the ECB decision (MNI preview here in PDF).
• Along with the expected rate-hold along with communications reiterating a data dependent approach, Lagarde's characterisation of economic resilience and/or the extent to which uncertainty has been alleviated by the US-EU trade deal should help shape market reaction.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 1.1bps at 1.952%, 5-Yr is unchanged at 2.225%, 10-Yr is down 0.7bps at 2.652%, and 30-Yr is down 0.7bps at 3.273%.
• UK: The 2-Yr yield is up 2.6bps at 3.94%, 5-Yr is up 1.8bps at 4.055%, 10-Yr is up 1bps at 4.633%, and 30-Yr is up 0.5bps at 5.482%.
• Italian BTP spread down 0.6bps at 81.5bps / French OAT spread down 0.3bps at 80.9bps

• -8,170 TYV5 112.5/113.5/114.5 call flys, 20 vs. 113-15/0.05%