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  • The Sterling picks up pace and drags the cross lower.
  • The cross drops to the mid-0.8500s, fresh yearly lows.
  • The House of Commons will vote later today.

The rally in the British Pound remains well and sound so far today and is now forcing EUR/GBP to drop further and record new 2019 lows in the 0.8560/50 band.

EUR/GBP focused on today’s vote

Both auspicious news around the Brexit negotiations and the persistent selling bias around the greenback are sustaining the strong up move in the Sterling, in turn hurting the European cross and dragging it to the area of 0.8560, last visited in May 2017.

GBP will be in centre stage later in the session as the House of Commons is expected to vote on several amendments. Still around Brexit, PM Theresa May reiterated it will be a meaningful vote on her Brexit plan on March 12. If this vote fails, two more votes will follow in the subsequent days, including one on the extension of Article 50.

In the meantime, the better tone in the broad risk appetite trends continues to support the upbeat mood in the riskier assets, in turn adding extra legs to the strong rebound in GBP.

What to look for around GBP

The British Pound is expected to remain under the microscope in the next weeks in light of upcoming meaningful votes and the likely extension of Article 50. However, the probability of a second referendum is close to zero while a ‘no deal’ scenario remains on the table. On the broader scenario, PM May made clear her intentions to remain in office to deal with the domestic agenda in the next months, opening at the same time another potential source of political uncertainty. This, plus deteriorating fundamentals in the UK economy should keep a serious bullish attempt in GBP somehow limited.

EUR/GBP key levels

The cross is retreating 0.42% at 0.8557 facing the next support at 0.8481 (low Mar.31 2017) followed by 0.8402 (monthly low Feb.22 2017) and then 0.8382 (monthly low May 10 2017). On the flip side, a break above a 0.8687 (10-day SMA) would expose 0.8728 (21-day SMA) and finally 0.8840 (high Feb.14).