“¢ Brexit uncertainties continue to weigh on the British Pound and helped regain traction.
“¢ Some renewed weakness in the shared currency seemed to cap any strong follow-through.
The EUR/GBP cross quickly reversed a dip to sub-0.8800 level and has now moved back within the striking distance of four-month tops set on Friday.
After Friday’s modest pullback, the cross managed to find decent support near the very important 200-day SMA and was being supported some renewed selling around the British Pound. The fact that a pro-Brexit hardliner Boris Johnson is a leading candidate to replace the outgoing PM Theresa May, concerns about a no-deal spilt kept exerting some downward pressure on the Sterling.
It is worth reporting that after facing immense pressure amid disagreements on her revised Withdrawal Agreement Bill, PM May finally announced on Friday that she will be stepping down as Conservative Party leader on June 7th. However, the leadership contest will only get underway in the second week of June, which might eventually fail to provide any immediate respite for the GBP bulls.
However, a fresh bout of weakness in the shared currency, led by declining yields in the German bund yields amid growing concerns about a sharp economic slowdown in the Euro-zone, did little to provide any additional boost and might turn out to be the only factor keeping a lid on any subsequent up-move, at least for the time being.
Investors also seemed reluctant to place any aggressive bids and remained on the sidelines in wake of relatively thin liquidity conditions on the back of Spring Bank Holiday in the UK. Hence, it would be prudent to wait for a follow-through buying before positioning for any further positive move amid near-term overbought conditions on the daily chart.
Technical levels to watch