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EUR/GBP Tightens its Range as Brexit Showdown Approaches Deadline

EUR/GBP Tightens its Range as Brexit Showdown Approaches Deadline

Daniela Sabin Hathorn, Analyst

Key Talking Points:

  • Barnier suggests talks are running out of time and significant differences remain
  • EUR/GBP continues to be range-bound as deadline approaches

EUR/GBP continues to be at the mercy of Brexit headlines as volatility continues to be high. A few headlines this morning from Chief EU negotiator Michel Barnier gave the impression that, although both sides are working hard for a deal, time is running out and significant differences remain.

This has put the British Pound on the defensive, removing part of the risk-on sentiment it was enjoying up until now. Talks seem to have gone in the dark for now as this coming weekend is likely to be a make-or-break situation for a trade agreement to happen, at least EU leaders are demanding it to be.

EUR/GBP Daily chart

EUR/GBP Tightens its Range as Brexit Showdown Approaches Deadline

EUR/GBP continues to be confined as it attempts to break free from the 0.90 area after a push higher was rejected at the 23.6% Fibonacci area at 0.9223. Bullish momentum in the Pound then took the pair lower, testing to break below the 0.90 level, but increased buying pressure was seen at 0.8985.

Momentum indicators are showing continued support for a push higher, but the 50-day moving average has now crossed below the 200-day average, pointing at bearish pressure increasing. This could lead to an attempted break f the horizontal resistance at 0.8950, followed by the 7-month low at 0.8864.

EUR/GBP Weekly Chart

EUR/GBP Tightens its Range as Brexit Showdown Approaches Deadline

The weekly chart shows price action is consolidating the end of a symmetrical triangle formed since the beginning of March. Symmetrical triangles usually see an increase in volatility as there is to be an expected break in either direction.

To the downside, a fall below 0.88865 could see continued bearish pressure towards 0.8560, which would see EUR/GBP returning to the sideways channel back at the beginning of 2020. To the upside, a break above 0.9155 would likely see increase resistance at the 23.6% Fibonacci at 0.9223.

--- Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

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