EURGBP Finds Support and Looks to Mount Another Rally
The EUR to GBP exchange rate has bounced at key support on the week and the pair is now looking to make a move for the 0.9000 level again. In my last article on the rate, EURGBP Lower as UK House Prices Hit Record High, I said: “…the market looks like a test of 0.8870 should happen this week.”
That test happened but the Euro has held support well and will look to the next catalyst. This morning sees some construction data from the U.K. and a speech from the Bank of England’s Saunders, but I do not expect these to be market-moving.
The talks on Brexit have stalled once more with the EU’s Chief Negotiator stating that a deal between the two sides, “seems unlikely,” by the end of the transition period on December 31st. The U.K. has been adamant that they will not extend the deadline again. If no deal is agreed, the trading relationship between London and Brussels would revert to World Trade Organization rules – which would involve various tariffs.
The next round of talks is scheduled for next week, September 7th, and this will bring headline risk for the EUR to GBP exchange rate. The following day will be the first estimate of third quarter GDP for the Eurozone, so we can look for the pair to trade within the current range ahead of those events.
EURGBP Technical Outlook
The EURGBP is playing out the range between 0.8950 and 0.8870. The latter has now seen a bounce and if EURGBP can hold this in the days ahead then a rally back to test 0.9000 is likely. 0.8870 is the obvious stop loss level for long positions.