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EUR/GBP: Brexit optimists marked fresh 22-month low, parliamentary vote in spotlight

  • EUR/GBP flirts with 0.8500 at the initial trading hours on Tuesday.
  • The pair flashed a fresh 22-month low, near 0.8470, during day-start on upbeat Brexit news.
  • Sellers may aim for 0.8430 till the pair remains under 0.8500, a break of which can recall 0.8560 on the chart.

EUR/GBP trades near 0.8500 during early Tuesday. The quote dropped to a 22-month low at the start of day’s trading as Brexit optimists hailed the Strasbourg meeting between the UK PM Theresa May and the EU Commission chief Jean-Claude Juncker. While nothing big is up from the EU, the British economic calendar has crucial events like the parliamentary vote on Brexit, monthly gross domestic product (GDP) and production figures to observe.

The EUR/GBP pair lost around 70 pips as the Strasbourg meeting was nearing an end. New from the May-Juncker meet pushed GBP buyers to expect that PM May finally managed to get a good deal from the EU policymakers, including legal assurances on Irish backstop, that may get accepted at the parliament voting.

However, comments from the UK opposition Labour leader Jeremy Corbyn that May couldn’t secure a deal that can be accepted in today’s vote and the parliament should reject it triggered pullback of the British Pound (GBP).

The GBP traders will have a busy day ahead that begins with monthly readings on GDP, manufacturing production and industrial production for January. The GDP is likely to have grown by 0.2% against -0.4% contraction during December whereas industrial production may have stalled at 0.0% after declining to -0.5% MoM in the previous month. Manufacturing production is also expected to mark 0.0% figure on a monthly basis versus -0.7% prior while the bearish market consensus of -2.0% against -2.1% previous on YoY.

Following the data dossier, traders will move to the crucial parliamentary voting on the Theresa May’s Brexit proposal. This will be PM May’s second appearance with the Brexit deal, after the first one was humiliated in January.

While recent news signal MPs to support PM May’s plan in today’s parliament, a rejection might also not be detrimental for the UK as it will lead to voting on leaving EU with no deal followed by votes on extending Article 50 deadline (currently March 29) during March 13 and 14 respectively.

Technical Analysis

Should prices remain under 0.8500, chances of witnessing 0.8430 and May 2017 low near 0.8380 can’t be denied.

Meanwhile, 0.8560, 0.8630 and 0.8690 are likely immediate resistances for the pair to clear ahead of aiming for 0.8710.

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