EUR to GBP: Bearish as Johnson and Von Der Leyen Meet Tomorrow
The EUR to GBP exchange rate is on a rollercoaster lately. That is if you look at the lower timeframes. However, an ample perspective covering the price action since last April reveals a market in consolidation.
Although the EUR to GBP evolves in a rising channel, the price action resembles a consolidation rather than a bullish trend. The 0.9 level proves key to the EURGBP, an overly sensitive currency pair to everything Brexit related.
Brexit Transition Period to End in December
Yesterday marked the beginning of the infringement period for the U.K. breaking the Withdrawal Agreement. The European Commission sent a notification letter, and the GBP tanked on the news.
But today, some hope of a deal getting done until December’s deadline emerged again. UK’s Jenrick, the Secretary of State for Housing, Communities and Local Government, is out with some hawkish comments for the pound. He acknowledges that while significant issues still need to be addressed and resolved, the end of the transition period is still possible by December’s deadline.
More precisely, a deal is still possible, and the GBP flies on the news.
Also, there is some chatter in the market of a possible meeting between Boris Johnson and Von Der Leyen tomorrow. Because the markets are closed tomorrow, expect the positioning on the GBP pairs to take place today.
Technical Setup for EURGBP
The EUR to GBP exchange rate moved sideways for almost six months. In the meantime, it tested support at the median line of the channel.
However, the more the price tests a support level, the weaker the support becomes. So far, the support rejected the EURGBP price for two times. On this new attempt, the chances are that the market moves below the 0.90 and to the next level of support provided by the lower edge of the channel.
Bears would like to sell at market at 0.9080 area with 0.9200 stop loss and 0.8900 take profit. For more about technical analysis and how to trade currencies, consider our Forex trading course.