Search ForexCrunch
  • EUR/GBP drops below the 0.8800 handle.
  • The cross drops to fresh multi-month lows.
  • Optimism around a Brexit deal supports GBP.

The strong rally in the Sterling looks unabated so far on Friday and is forcing EUR/GBP to recede further to the area below the 0.8800 key support, or 5-month lows.

EUR/GBP weaker on Brexit hopes

The European cross has met a wave of selling pressure after hopes of a Brexit deal remain on the rise for yet another session today. In fact, extra optimism was poured over markets after the constructive meeting between negotiators Barnier and Barclay.

Rising odds for a Brexit agreement could not come on a better timing ahead of next week’s key EU Summit on October 17-18. The Sterling remains well bid and climbing to new multi-months highs vs. both the single currency and the Greenback.

In the meantime, the cross closed with losses in eight out of the last nine weeks following the rejection of 2019 highs beyond 0.93 the figure on August 12th and it has also broken below the 61.8% Fibo retracement of the May-August rally.

EUR/GBP key levels

The cross is retreating 0.62% at 0.8787 and a drop below 0.8761 (monthly low Oct.11) would expose 0.8667 (78.6% Fibo of the May-August rally) and then 0.8488 (monthly low May 6). On the other hand, the next resistance aligns at 0.8976 (100-day SMA) seconded by 0.9014 (55-day SMA) and finally 0.9148 (monthly high Sep.3).