- EUR/GBP is chopping away sideways between a range of 0.8665 and 0.8706, consolidating the drop from the 0.8840s on a firmer cable.
- GBP/USD holds on the 1.30 handle as Brexit negotiations go down to the wire.
EUR/GBP has been changing hands in a relatively wide range following a sharp correction back into the 0.87’s yesterday with the dollar giving back some ground across the board, allowing for a recovery bid in the euro back into the 1.13’s. Meanwhile, the Brexit headlines keep coming.
As the clock ticks down to Brexit, there do not appear to be any breakthroughs in Brexit talks, according to an unnamed EU official cited by Bloomberg. However, a Reuters report came out earlier to say that a formal text to changes on the political declaration could come about by mid-March and be approved during the EU Summit on 21-22 March. Thus, we are none the wiser.
“We maintain our view that on a soft Brexit EUR/GBP is likely to settle down in the 0.85 to 0.87 area in the coming months. On a hard Brexit, we would expect EUR/GBP to spike up towards parity,” analysts a Rabobank explained, adding, “Insofar as neither the electorate, parliament nor the EU favour a no deal Brexit it is our view (and that of the market consensus) that a deal will eventually be passed”
EUR/GBP has recently failed ahead of the .8862/75 (55 and 200-day ma) and cloud resistance at .8887:
“Minor support at the .8745/23 band has given way which leaves the focus on the .8620/18 lows. Only failure at .8620/18 would suggest an ongoing weakness to the base of the channel at .8541 and potentially the 200-week ma at .8365. It is on the defensive. The market is expected to struggle on rallies to the 200 day ma at .8862, and only above here allows for a move to the 55-day ma at .8875 and this, together with the October .8941 high, are expected to contain the topside,” analysts at Commerzbank noted.