- EUR/GBP gains nearly 50 pips as GBP struggles to find demand.
- Brexit negotiations are set to resume on June 12.
After starting the day below mid-0.87s, the EUR/GBP pair took advantage of the GBP weakness and rose toward the 0.88 handle to refresh its daily high at 0.8786. As of writing, the pair was trading at 0.8781, adding 0.5% on the day.
On Tuesday, Brexit negotiations, which came to a halt because of a dispute regarding the Irish border, are set to resume in Brussels. Ahead of June 28 EU summit, it is crucial for both sides to make progress and investors are likely to remain skeptical and stay away from the GBP. On the other hand, according to The Times, following this week’s talks, the Brexit withdrawal will be discussed in the UK’s Hous of Commons on June 12.
Earlier today, Michel Barnier, the European Union’s chief Brexit negotiator, told Bloomberg TV that a failure to reach a deal on the Irish border would increase the risk of a messy divorce in October. “Nothing will be frozen, we have no time to freeze, the time is short, the clock is ticking. If we don’t make enough progress it could be a stronger risk for the final stage,” Barnier explained.
On Tuesday, Markit is going to release service sector PMI data for both the UK and the EU. Additionally, retails sales change from the euro area will be looked upon for fresh impetus as well.
Technical levels to consider
A daily close above 0.8800 (psychological level/May 23 high) could open the door for further gains toward 0.8835 (May 10 high) and 0.8900 (psychological level). On the downside, supports could be seen at 0.8700 (psychological level/May 29 low), 0.8625 (Apr. 16 low) and 0.8600 (psychological level/May 24, 2017, low).
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