- The cross rebounds from 2019 lows in sub-0.86 area.
- PM May said and extension of Article 50 will be ‘short and limited’.
- Meaningful vote expected on March 12.
The Sterling is now losing some shine and motivating EUR/GBP to bounce off fresh 2019 lows in the sub-0.8600 area.
EUR/GBP picks up some pace on May’s speech
After recording fresh yearly lows in the 0.8590/85 band, the European cross has now managed to reclaim some buying interest following renewed selling pressure around GBP.
In fact, the British Pound is now losing upside momentum after PM Theresa May said the extension of Article 50 will be ‘short and limited’, adding that the extension should leave the ‘no deal’ option on the table.
May also said that a second meaningful vote will be on March 12 and the Parliament will vote on Article 50 extension on March 14.
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 0.73% at 0.8607 facing the next support at 0.8588 (2019 low Feb.26) 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 0.8710 (10-day SMA) would expose 0.8737 (21-day SMA) and finally 0.8840 (high Feb.14).
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