EURGBP Heads for 0.90 Level as Brexit Concerns Resurface
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EURGBP talking points:
- As Brexit negotiations continue between the EU and the UK, the two sides seem as far apart as ever.
- With EURGBP already at its highest level since November 28 last year, further gains seem likely near term.
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EURGBP heading for 0.90 level near-term
The Pound has come under more pressure against the Euro, with EURGBP reaching its highest level since November 28, 2017, and the cross looks set to reach the psychologically important 0.90 mark near-term as Brexit concerns continue to weigh on the UK currency.
While European Council President Donald Tusk and UK Chancellor of the Exchequer Philip Hammond argue about the future EU-UK relationship after Brexit and whether UK financial institutions will still have access to Europe, EURGBP is currently testing resistance on the daily chart from a trendline joining the October 12 and November 15 highs.
Meanwhile, it is well supported by a second trendline joining this year’s lows.
EURGBP Price Chart, Daily Timeframe (September 17, 2017 – March 7, 2018)
If the current upward trend in EURGBP continues, the October/November highs at 0.9014 and 0.9033 will be the first targets although they will provide stiff resistance and the cross could well fall back again if they are reached.
In the meantime, GBP is suffering more broadly from a move into safe havens such as gold, the Japanese Yen, the Swiss Franc and US Treasuries as concerns mount about a trade war following the resignation of US President Donald Trump’s economic adviser Gary Cohn, seen as an opponent of protectionism.
The current strength of the Euro-Zone economy was also highlighted Wednesday, with confirmation that it grew by 0.6% in the final quarter of last year compared with 0.4% growth in the UK. The gap between the EU and the UK was highlighted too by draft EU guidelines for ties with the UK after Brexit that will likely be unacceptable to the UK.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.