- EUR/GBP accentuates losses below the critical 0.90 handle.
- UK PM B.Johnson will address the country later today.
- ‘Brexit delay’ bill should pass the House of Lords tomorrow.
The increasing upside pressure around the British Pound is forcing EUR/GBP to shed further gains and break below the critical support at 0.90 the figure to record fresh two-month lows in the mid-0.8900s.
EUR/GBP weaker on Brexit optimism
The European cross is down for the third consecutive session on Thursday in response to the apparent change of heart around the British Pound, both vs. the shared currency and the Greenback.
In fact, the Sterling is rebounding markedly following rising optimism on the Brexit front, particularly after rebel Tories and opposition MPs voted in favour of delaying the Brexit deadline on Wednesday and the government failed to push a bill calling for general elections on 15 October.
However, a ‘no deal’ scenario is still well on the table, while political turmoil in the UK is expected to pick up pace in the coming weeks.
Later in the day, UK PM Boris Johnson is expected to address the country from Number 10.
Nothing relevant in the docket today should leave the bulk of the attention on developments from across the Channel.
What to look for around GBP
Renewed upside momentum is pushing GBP to fresh tops in light of the recent political events in the UK. However, the Sterling is forecasted to remain under scrutiny as political effervescence is far from abated, while the likeliness of general elections has boiled down to a matter of time only. On another direction, the BoE remains in ‘silent-mode’ regarding Brexit and its potential outcomes. It is worth recalling that, at its last meeting, the central bank refused to incorporate the likeliness of a ‘hard divorce’ scenario to its projections.
EUR/GBP key levels
The cross is losing 0.53% at 0.8954 and a drop below 0.8919 (100-day SMA) would expose 0.8891 (monthly low Jul.25) and then 0.8838 (200-day SMA). On the upside, the next resistance is located at 0.9119 (21-day SMA) followed by 0.9148 (high Sep.3) and finally 0.9183 (high Aug.20).
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