EURGBP Price: Close to Support, Rally Now Possible
EURGBP price, news and analysis:
- The EURGBP cross is currently being driven by Brexit news, which is lifting the British Pound.
- However, having reached a seven-week low, a modest recovery is now on the cards.
EURGBP due for a rally
Against the expectations of many commentators, Sterling has extended this year’s advance on hopes that the March 29 deadline for the UK to leave the EU will be extended and pressure for a second referendum that could reverse the decision to quit the bloc.
Moreover, UK Prime Minister Theresa May has decided to reach out to members of Parliament from the opposition parties ahead of her return to the House of Commons Monday to outline how she plans to move forward. The leader of the main opposition Labour party,Jeremy Corbyn, has said he will boycott talks until May rules out the option of a no-deal Brexit.
Nonetheless, the British Pound remains relatively firm and, technically, EURGBP continues to trade within a downward channel that is still in place.
EURGBP Price Chart, Hourly Timeframe (January 2-17, 2019)
Chart by IG (You can click on it for a larger image)
Looking ahead though, it is still hard to see a possible Plan B after the crushing defeat of May’s Plan A and, with UK politicians as divided as ever, GBP could well take a breather now – pushing EURGBP up towards the middle of the channel around 89.50 and potentially even to the top of the channel around 0.90.
On the other side of the equation, Eurozone inflation remains well below the European Central Bank’s target of below but close to 2.0% over the medium term. That means the ECB is still likely to keep Eurozone monetary policy loose for some time yet but, with that now fully priced in by the markets, it is unlikely to prevent an EURGBP correction higher.
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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.