- The cross debilitates to the 0.8820 region and rebounds.
- GBP remains under pressure on Brexit uncertainty.
- PM Theresa May’s Brexit ‘Plan B’ next of relevance.
The performance of the Sterling remains in centre stage at the beginning of the week, prompting EUR/GBP to recede from tops near 0.8860 although meeting quite solid support in the 0.8820 region.
EUR/GBP focused on PM May
The European cross is advancing for the second session in a row today, now shedding some gains after briefly testing the key 200-day SMA around 0.8860 during early trade.
Developments surrounding the Brexit negotiations will exclusively drive the sentiment around the British Pound and will be the main driver of the price action around the cross amidst lack of volatility around the shared currency.
It is worth recalling the PM T.May is expected to deliver a Brexit ‘Plan B’ after the House of Commons rejected her original deal last week. Despite winning the subsequent no-confidence vote, later cross-party talks appear to have yielded no meaningful results, opening the door for a continuation of the prevailing uncertainty.
At this juncture, the likeliness of a no-deal at all remains on the cards, while a second referendum appears with marginal odds. On the latter, recent polls suggest similar results as they were before the referendum in June 2016.
EUR/GBP key levels
The cross is now gaining 0.07% at 0.8829 and a break above 0.8861 (200-day SMA) would open the door to 0.8902 (55-day SMA) and then 0.8985 (high Jan.15). On the other hand, the next support is located at 0.8763 (2019 low Jan.17) seconded by 0.8723 (monthly low Oct.10 2018) and finally 0.8655 (monthly low Nov.13 2018).
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