EUR/GBP technical outlook
- Resignation of former Brexit secretary Dominic Raab and the Secretary of State for Pension and Work, Esther Mcvey, have rocked the Theresa May’s cabinet, exactly when the opportune moment came for EUR to surge against GBP, before it had stumbled around the six-monthly lows at 0.8665.
- The British pound whiplashed in a “Tough Brexit”, or “No Brexit scenario”, while Euro started to rise on last Thursday.
- Despite recent Euro breakthrough, the EUR/GBP outlook remains bearish, as Theresa May is expected to yield a Brexit deal and to avoid a vote of no-confidence, being supported by her senior conservative members in the cabinet.
EUR/GBP daily chart
EUR/GBP abrupt upsurge unlikely to last long
On last Wednesday, GBP was experiencing a decent run against EUR, USD and JPY, however, news of stepping off of former Brexit minister Raab and Secretary of State for Pensions and work, McVey, suddenly shattered the salubrious GBP against EUR and it started to muzzle in the muds. For the last three days, EUR had been experiencing its best bull run against GBP in a yearly time frame, as in Wednesday, Eur had secured 150 pips gain against GBP.
However, for now, Euro catapulting over the GBP fortifications slowed down and the recent upsurge is unlikely to continue, as GBP is shining slightly against USD, followed by a dovish FED talk from the newly appointed FED vice chairman, Richard Clarida. On the European soil, political turmoil began to yield shapes, as German Chancellor Merkel, and French President Macron both have been suffering tremendous tottering and had failed to win the recent elections. Italy is in a direct collision course with EU regarding its budget deficit.
On the other hand, PM May might have gained a tough Brexit deal, and newer developments are anticipated in the upcoming urgent European Summit due in November 25th. She is also expected to survive the parliamentary position, being backed by senior conservative cabinet members and still 28 letters are required to call for a no-confidence vote, which is quite unlikely to happen, as a replacement would only delay the Brexit negotiations and political growth for both UK and Eurozone.
When this report is being written, GBP has been mounting higher against USD sharply, residing at 1.2850 region and EUR is residing at 1.1431, while the EUR/USD pair is being traded at 0.8898, snapped downwards, erasing almost all of its overall daily gains. Key support for EUR/GBP pair remains at 0.8850 region, while it has already broken the critical resistance levels. Although, market volatility is expected for EUR/GBP this week, yet an extension of this Euro bull run is highly unlikely to sustain.
Read more on Sterling performance here
[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]