- EUR/GBP has moved higher in a fresh wave of demand on the latest Brexit headlines whereby talks are said to be on hold as May’s team can’t agree.
- EUR/GBP has moved up from prior retracement low at 0.8858 in a spike to a high of 0.8874, falling short of the day’s high of 0.8883.
Following the news that Prime Minister Theresa May had a successful meeting with Conservative Party backbenchers on Wednesday, which has helped to downplay expectations that a leadership challenge is imminent, instead, today, EUR/GBP bulls have cheered yet another negative Brexit headline.
A Bloomberg story that implies that May’s Brexit team cannot agree on a way forward “over how to avoid customs checks at the Irish border without tying the UK into the EU’s trade regime forever.” The story explained that 7 senior pro-Brexit ministers spoke out against the proposal that would allow the UK to stay inside the EU’s custom union indefinitely and look instead to prepare for a no-deal. Cable dropped to a couple of pips below the 1.28 handle but recovered into a close for the session a touch above the figure again. EUR/GBP popped also but is settling shy of the day’s highs following today’s ECB meeting.
ECB review
Analysts at ANZ Bank New Zealand explained that there were no policy changes or shift in forward guidance from the ECB as it sought to provide reassurance on its growth and inflation outlook:
“The ECB didn’t make any changes to its policy stance or forward guidance at Thursday’s meeting – reaffirming an end to bond purchases at the end of this year, with rates on hold through at least the middle of next year. In the post-meeting press conference, Mario Draghi sought to reaffirm the ECB’s confidence in the growth and inflation outlook. He stressed that solid domestic demand growth would support an ongoing expansion despite the weakness in recent data. Draghi said that recent data weakness and market volatility is not yet sufficient to get the ECB to change its baseline scenario and described risks as “broadly balanced”. He also stated that the ECB’s December forecast update will be important in assessing risks to growth.”
EUR/GBP levels
0.8860 was a 50% Fibo and the pair has cruzed through that and is taking on the descending channel resistance. A break of 0.8880 opens0.8920, just above the 38.2% Fibo level of 0.8915; This all guards 0.8931 as the 55-day ma. On the other hand, a break below 21-D SMA opens the 2017-2018 support line at 0.8767. That level guards the way to 0.8750 and 0.8723 channel lows.
Share
