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  • Euro rallies as Italy anti-establishment coalition fails to form successful government.
  • Volumes are going to be thin for Monday with little of importance on the macro calendar and London dark for a long weekend.

The EUR/GBP is trading higher on the early week’s action, peaking at a session high of 0.8795.

Over the weekend, Italy’s attempt to form a new government were scuttled by the inbound coalition Prime Minister after the Italian President rejected the new government’s selection for Economy Minister, an avid anti-Euro critic. Despite the fact that Italy is likely to head into a new round of elections amid calls for the President’s impeachment following the constitution-challenging move, markets are reacting positively to the news as the far-right and anti-establishment coalition now governing Italy appears to have had their anti-Euro leanings squashed. The EUR is bidding up on the news that Italy failed to install a Euro-sceptic as Economy Minister, and the Euro is lifting against the UK’s Sterling, which continues to flounder amidst consistently dovish data and a wounded Bank of England (BoE) that is still attempting to regain its footing after being knocked off their hawkish perch recently.

Monday sees little action on the economic calendar, and with London markets shuttered for the long weekend thanks to the Spring Bank Holiday, volatility is likely to be limited to kick off the new week’s first market session.

EUR/GBP levels to watch

As noted by FXStreet’s own Ross Burland, the EUR/GBP is “in a constructive correction from the lows of 0.8712 with eyes on the 100-D SMA at 0.8794 ahead of the key rising channel. 0.8820 is the next key resistance guarding the 200-D SMA at 0.8856. To the downside, 0.8620 guards a run towards 0.8526 as being the 78.6% retracement of the move from 2017 on the wide”