EUR/GBP comes under pressure near 0.8900
- EUR/GBP loses further ground and tests 0.89.
- Brexit deal optimism boosts the Sterling.
- EUR keeps the bid tone despite dovish ECB.
The upbeat momentum around the Sterling is now picking up the extra pace and is dragging EUR/GBP to test the lower end of the weekly range in the 0.89 neighborhood.
EUR/GBP up on Brexit hopes
The British Pound gathered extra steam at the end of the week in response to rising hopes on an eventual EU-UK deal and auspicious headlines regarding the conflict surrounding the Irish backstop.
It is worth recalling that investors’ change of heart around the Sterling has been exacerbated after PM B.Johnson’s bill to call for early elections was defeated twice in Parliament before it enters suspension. This outcome has fuelled hopes of an extension to the Brexit deadline to January 2020 unless MPs approve a soft/hard EU-UK divorce by October 19.
In the meantime, UK PM Boris Johnson is expected to meet EC’s Jean-Claude Juncker in Luxembourg on Monday.
EUR/GBP key levels
The cross is retreating 0.63% at 0.8910 and a drop below 0.8899 (monthly low Sep.12) would expose 0.8891(monthly low Jul.25) and then 0.8840 (200-day SMA). On the upside, the next hurdle lines up at 0.9031 (21-day SMA) followed by 0.9053 (55-day SMA) and then 0.9148 (monthly high Sep.3).