EURGBP Extends Losses After Tapping Multi-Month Highs as Optimism Build for a Brexit Deal

After its 80-pip loss on Tuesday, EURGBP gave up more ground in yesterday’s trading as market participants anticipate a Brexit deal. The currency pair peaked at 0.9078 during the Asian session before closing the day at 0.9019, down from its opening price which was at 0.9057.

Significant developments on the UK and EU’s Brexit negotiations have yet to be made. However, the lack of it did not keep investors from being optimistic that a deal would be ironed out by this year. The most noteworthy development we heard of was the EU’s willingness to compromise its stance on having a fair playing field for businesses. Perhaps this was enough for the pound to attract bids.

Today, our economic calendar is blank for market-moving data coming out of the euro zone and the UK. This means that market sentiment will likely dictate direction on EURGBP.

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EURGBP Outlook

On the 4-hour time frame, it can be seen that the uptrend on EURGBP is still intact. This is evidenced by the fact that the currency pair is testing support at the rising trendline from connecting the lows of April 30, May 8, June 9, and June 16. This price, around 0.9020, also coincides with the 100 SMA. Reversal candlesticks around this level could mean that buyers may soon push EURGBP to its June 29 highs at 0.9169.

On the other hand, a strong close below the trendline may mean that support on the rising trendline has been invalidated. The currency pair may then continue to trade lower to its near-term support at 0.8910 where it bottomed on June 16.

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