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  • EUR/GBP gained strong traction on Monday and surged past the 0.9100 mark.
  • The incoming Brexit headlines weighed on the pound and remained supportive.

The British pound witnessed some heavy selling during the early European session and pushed the EUR/GBP cross to seven-week tops, around the 0.9130-35 region in the last hour.

The cross caught some aggressive bids on the first day of a new trading week and prolonged its recent strong rebound from the 0.8865-60 support zone. The incoming Brexit-related headlines took its toll on the sterling, which, in turn, was seen as a key factor behind the EUR/GBP pair’s strong move up.

The EU’s chief Brexit negotiator Michel Barnier briefed the bloc’s national ambassadors and said that differences on the three key outstanding issues remain open. Separately, The Sun reported that UK Prime Minister Boris Johnson is ready to pull out of Brexit talks in response to new EU demands.

In the latest development, a UK official reportedly said that Brexit talks are likely to end today if there is no further progress. Given that the transition period will end on December 31, the deadlock certainty raises the risk of a no-deal Brexit and might continue to weigh on the pound.

Apart from this, the strong momentum could further be attributed to some technical buying on a sustained move beyond the 0.9080-85 horizontal resistance. Hence, some follow-through strength towards mid-0.9100s, en-route the 0.9195-0.9200 region, looks a distinct possibility.

Technical levels to watch