EUR/GBP: switches on market sell-off due to European politics. EUR/GBP is back below the 10 and 50-D SMA with eyes on 0.8620. EUR/GBP plummeted on Monday in thin liquidity from 0.8795 down to 0.8724 and in tandem with EUR/USD dropping from 1.1728 to 1.1607. For the cross, the 100-D SMA has been the key resistance area and bullish hopes for a return back into the rising channel have ebbed back over the horizon. Currently, EUR/GBP is trading at 0.8737. EUR/GBP has been trading within a daily chop between 0.8712 and 0.8794 since dropping below the base of the rising channel on the 14th May. Political angst has been the driver as markets seek to understand the implications for the Eurozone project after both the Spanish and Italian political developments of late. European politics dismantles bullish prospects for the euro nearterm First of all, Italy has been without a government since the last vote on the 4th of March, after no party secured a parliamentary majority. However, talks collapsed after Italian president Sergio Mattarella blocked the M5S-Lega coalition’s euro-skeptical choice for finance minister; Initially offering the euro a lift in thin Asian markets on the basis that the prospects for Euroscepticism had been abated by the breakdown of progress being made by the coalition. However, it is very apparent now that defusing near-term Italian political risk may not offer a clear path higher for the euro in coming months. The president’s decision has forced Giuseppe Conte to resign from the proposed premier position. “We were a few steps away from forming a government, and we were stopped because in our cabinet there was a minister who criticised the EU,” Five Star leader Luigi Di Maio said. “I want this institutional crisis to be taken to parliament … and the president tried,” he told state broadcaster RAI. President Sergio Mattarellamade a televised speech in Rome, explaining his motive and said that the economy ministry “always constitutes an immediate message of trust or alarm” for financial markets, and as such he could not accept a minister who may “inevitably provoke Italy’s exit from the euro”. As far as Spanish politics go, the nation joins Italy in becoming a huge political headache for the EU, after a week of political turmoil in the country and now moves towards imminent elections after the no-confidence motion that rocked the Madrid establishment and dragged the eurozone into a fresh crisis. Spanish lawmakers will debate if the Prime Minister’s minority government will stay in power after the country’s main opposition party called for a confidence vote last week. However, the Prime Minister, Mr Rajoy, has ruled out a snap election and warned that the political instability will wreak havoc on Spain’s fragile economic recovery. This all follows claims over illegal payments from a slush fund run by the Popular Party’s ex-treasurer, Luis Barcenas. Then, its back to Brexit The UK is due to leave the EU in March 2019 and negotiators have said they want a deal in place by the end of the year. Ms Sturgeon was speaking on BBC and said, “With every week that passes without the UK being clear and focused and realistic about what it wants to achieve, that prospect of a damaging no deal seems to me to get greater and that’s in nobody’s interest.” EUR/GBP levels EUR/GBP is travelling back in a bearish correction and through the moving averages t the downside again, losing sight of the rising channel having taken out the 10&50-D SMA. 0.8620 guards a run towards 0.8526 as being the 78.6% retracement of the move from 2017 on the wide. On the upside, 0.8820 guards the 200-D SMA at 0.8856. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next GBP/USD: BoE rate expectations are firming; 50% chance of a 25bp hike for August – Scotiabank FX Street 5 years EUR/GBP: switches on market sell-off due to European politics. EUR/GBP is back below the 10 and 50-D SMA with eyes on 0.8620. EUR/GBP plummeted on Monday in thin liquidity from 0.8795 down to 0.8724 and in tandem with EUR/USD dropping from 1.1728 to 1.1607. For the cross, the 100-D SMA has been the key resistance area and bullish hopes for a return back into the rising channel have ebbed back over the horizon. Currently, EUR/GBP is trading at 0.8737. 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