The EURGBP pair is little changed as the market refocuses on Brexit talks and the important economic data scheduled for this week.
Brexit talks resumes
The EURGBP pair is trading holding on at about 0.8728 as the market starts to concentrate on the Brexit meetings between the EU and the UK. Still, the market believes that the meetings will be mired because of differences between the UK and the EU.
Several differences have already emerged. First, with the meetings taking place virtually, there are concerns that there will be no physical contact between the negotiators. Second, time is of the essence, with the UK remaining adamant that it will not ask for an extension on June 30th.
Third, there are key differences on the regulations that the UK will follow when transition period ends in December this year. The UK has insisted that its companies will not follow the rules set by the European Union. On the other hand, the EU has insisted that UK firms must stay within the EU regulations to prevent unequal competition. Other key differences are on fisheries, legal issues, and other key trade issues.
EUR/GBP waits for key economic data
There will be no major economic data from the United Kingdom (UK) and the European Union (EU) today. The only main data from the region will be the Italian industrial production data. Still, there will be key economic data from the UK and the EU this week. On Wednesday, we will receive the GDP, trade, manufacturing, and industrial production data from the UK. We will also get the industrial production data from the eurozone. On Thursday, we will get the inflation data from the eurozone and on Friday, we will receive the GDP data from the region.
On the daily chart, we see that the EUR/GBP pair was in a strong downward trend starting from mid-March, when it was trading at 0.9458. The pair found significant support at around 0.8622, which is slightly below the 50% Fibonacci retracement level. In the past few weeks, we see that the pair has been in consolidation, leading to a small descending triangle pattern. This implies that the pair will likely breakout in a downward trend in the near term.
On the flip side, a move above 0.8890 will invalidate this trend because it will signal that there are still buyers in the market. This price is along the 50% retracement and along the upper swing made on April 20.