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Risk of Break Higher in EURGBP as Brexit Deadline Pushed to November

Risk of Break Higher in EURGBP as Brexit Deadline Pushed to November

Martin Essex, MSTA, Analyst

EURGBP price, news and analysis:

  • The UK and the EU now aim to finalize Brexit divorce terms by the middle of November at the latest, rather than in October, according to Bloomberg.
  • That could strengthen EURGBP further once trendline resistance is broken.

Our trading forecasts for Q3 have been published; you can find the EUR and GBP guides here.

And check out the IG Client Sentiment data to help you trade profitably.

EURGBP may benefit from Brexit delay

A Bloomberg report that the EU and the UK have dropped their October deadline for a Brexit deal, pushing it forward to the middle of November, could strengthen EURGBP, with the Euro also potentially benefiting from remarks by Italian Finance Minister Giovanni Tria that Italy is not planning to breach the EU’s budget deficit limit.

GBP remains sensitive to Brexit news, tending to ease whenever the possibility increases of the UK leaving the EU next March without a deal. Meanwhile, EUR is arguably being held back by Italian debt concerns – which is why Tria’s comments, which contrast with earlier remarks by Deputy Prime Minister Luigi Di Maio, were seen as positive.

However, the pair is now close to trendline resistance, which needs to be broken for the advance in EURGBP to accelerate.

EURGBP Price Chart, Daily Timeframe (March 28 – August 29, 2018)

Latest EURGBP price chart.

Chart by IG

As the chart shows, EURGBP has been climbing since mid-April but for the advance to accelerate it needs to break conclusively through the trendline joining recent higher highs. Some weakness in the pair Wednesday could delay that – but it seems likely later.

More to read:

Brexit Latest: Kicking the Can or Sealing a Plan?

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--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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