- EUR/GBP about to end the week with gains, far from the peak.
- Pound recovers strength as EU and UK continue with negotiations.
The EUR/GBP retreated further and bottomed at 0.8982, hitting a fresh three-day low. It then rebounded rising to 0.9010. Brexit speculation continues to boost volatility in pound’s crosses.
A definition regarding Brexit is expected over the next days so the pound is exposed to rumors and speculations. The euro is showing weakens with the EUR/USD retreating from multi-year highs into negative territory for the day.
From a technical perspective, EUR/GBP broke days ago a downtrend line around 0.9000, but the move showed some difficulties. A firm decline back under 0.9000 would point to lack of definition ahead. The key medium-term support stands at 0.8860.
A decisive week ahead
Next week, a resolution regarding Brexit should be more clear. On Thursday, European leaders will meet to define Brexit and the Recovery Fund. High-risk events.
Also, on Thursday, the European Central Bank will have its meeting. It is a particular meeting as market participants expect action. Analysts at TD Securities look for the ECB to keep its policy rate on hold, but deliver further easing via the PEPP and TLTROs. “For the PEPP, we’re in line with consensus in expecting a €500bn boost and 6-month extension to end-2021. And for the TLTROs, we look for a 25bps reduction in the interest rate, plus a one-year extension through to June-2022.”
Technical levels
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