EURGBP: Brexit Talks Hit Crunch Time and Could See a Large Move
EURGBP has been trading in a range since June with the pair unable to break from a 300 pip range. Recent sterling strength has led to a test of the lower support but Brexit talks are now at a critical stage and a large move should be expected soon.
The pound has strengthened recently after Boris Johnson’s “walkaway” deadline turned out to be a bluff, with talks ongoing in London and Brussels. U.K. negotiator David Frost and his EU counterpart Michel Barnier have both signaled a positive tone recently but the headlines keep swinging from hope to fear. Irish foreign minister Simon Coveney warned Monday that they were “running out of time,” but after three years of negotiations, Valdis Dombrovskis, a top EU trade official, commented today that “there are still important elements to be resolved. So there is still substantial work to do,” in order to reach a full agreement for January 1st.
The sticking point for talks has revolved around three points: fishing, compliance of a deal, and export standards for the U.K. to sell into the EU. Both sides have accused the other of unreasonable demands, but the clock is ticking if they want to avoid reverting to W.T.O. tariffs at the turn of 2021. This would be an unwelcome event for both sides amidst the current turmoil and the talks are at a crucial time.
The scenario for a deal or no-deal event still exists and this could see a large move in the EURGBP by the end of November.
EURGBP Technical Outlook
EURGBP has been trading in a range between 0.8870 and 0.9175 since June and has been unable to see a breakout either way. The pound has been strong lately and tested the lower end of the range. The Brexit situation could see a breakout occur and a sharp new trend could see the pair test the 0.9500 highs or the 0.8400 support depending on a deal-or-No Deal scenario. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.