- Pair breakout to the downside, accelerating and hits level sunder 0.8500.
- Pound’s strength drove the pair lower despite lack of headlines.
The EUR/GBP pair dropped sharply over the last two hours amid a rally of the Pound across the board. The demand for GBP jumped suddenly ahead of the weekend with the GBP/USD rising 200 pips from the day’s low.
The pair was holding a bearish tone but tumbled more than 60 pips over the last hours. The EUR/GBP dropped from 0.8570 to 0.8496, reaching the lowest since March 27. Then rose back above 0.8500 and it was hovering around 0.8515/20, about to post the lowest weekly close since May 2017.
The weekly chart shows the pair back near a key long-term support located between 0.8460 and 0.8500. A break lower could signal more losses ahead and potently target the 2017 low at 0.8300/05.
After a busy week in terms of EZ and UK data, including the BoE meeting, attention might go back to the Brexit drama. “May sees a chance in the next 2 weeks for one last Brexit push ahead of 23 May EU elections and in order to wrap things up by end-June (so UK MEPs don’t need to show up for work). She might give in to Labour’s demands for “customs arrangements” later in the week, though Labour are hesitant to sign off before the elections. If that fails, Brexit focus shifts to post-summer/2020″, wrote TDS analysts.
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