EUR/GBP: Pullback is awaited
|The British pound is under the pressure of the Brexit outcome. The EU-UK talks continue without any development. Since the deadline of the year-end is getting closer, analysts expect that either this or the next week both sides will come to a conclusion. If the agreement is reached, the GBP will rise. Otherwise, the no-deal Brexit will drive the pound down.
Christine Lagarde has had a meeting today, but it didn’t have any impact on the euro so far. She emphasized that the services sector was more damaged than the manufacturing industry and reviewed ECB’s actions in response to the virus crisis. Besides, the German inflation report during the day may affect the euro.
Technical tips
EUR/GBP has been trading inside of the descending channel since September, so the trend is bearish. However, if we look at the last few candlesticks, we’ll notice a strong bullish potential. It has crossed the 200-day moving average (MA) and got closer to the upper trendline of 0.9000. We should expect it will bounce off this strong resistance and then dip. Elsewhere, the dead cross (the 50-day MA crosses the 100-day MA upside down) points to the soon fall of the pair. However, if EUR/GBP manages to break through this level, the way up to the next resistance of 0.9040 will be clear. In the opposite scenario, the move below the 200-day moving average of 0.8960 will drive the pair lower to the 0.8880-0.8900 zone.
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