EURGBP is flat in today’s session but is pointing at higher prices as the chess match over Brexit continues. The EU summit last week failed to produce anything of worth and we are now back to brinksmanship and the trading of blame.
U.K. negotiator Lord Frost said on Twitter: “The EU still needs to make a fundamental change in approach to the talks and make clear it has done so. We will stay in close touch.”
U.K. Prime Minister Boris Johnson said on Friday that there was point in further talks, saying the country would “prosper mightily” without a trade agreement, as the strategy pivots to an “Australian-style” trade deal. This would see the U.K. initially trading on World Trade Organization terms, which could see an increase in import prices.
Governor of the Bank of England Andrew Bailey was also talking about negative interest rates this week as he said that they tend to work best in the early stages of economic recovery. The bank had previously said that negative rates could be a tool in the event of a No Deal Brexit and traders will be watching for any further clues ahead of the November 5th BoE rate meeting, whilst the Brexit situation has the potential to change the outlook of that meeting.
Today sees speeches from the BoE’s Vlieghe and the Bundesbank’s Balz, which could have some headline risk but the market is likely to focus on Brexit and the potential for further virus restrictions and the knock-on effects to growth.
EURGBP Technical Outlook
EURGBP has been testing the 50-day moving average for the best part of a month and this should provide a base for higher prices. Yesterday’s close points higher and the resistance is 0.9175, which was a high in late-June. The 0.9000 level provides a nice level for a stop loss with 0.9300 being the ultimate target. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.