EUR/GBP back on the bid as Brexit negativity outweighs positive tones
|- EUR/GBP's correction from recent lows down at 0.8691 to 0.8774 has been sold into again and the price now oscillates between 0.8709 and 0.8738.
- EUR/GBP started out in Asia with a bullish gap with sterling plunging due to the weekend's negative Brexit news.
EUR/GBP is now correcting higher again to 0.8741, off the recent lows at 0.8709 as cable is faded through the 10-hr SMA despite the news that the European Union chief Brexit negotiator Michel Barnier had said earlier that the main elements of the Brexit treat text were ready which is being treated with scepticism and is also being reported that he will tell EU27 that a Brexit agreement still not reached.
Instead, it is thin out there in North America today on account of Veteran's Day and sterling bulls can't find the liquidity where too many negatives surrounding the prospects for Brexit are taking their toll whereby Theresa May had been forced to abandon plans for an emergency cabinet meeting to approve a Brexit deal this week and has been publicly warned by a Brexiteer cabinet minister that she will fail to have any deal approved by the cabinet unless it is "going to deliver on the referendum result". This follows the weekend's report in The Sunday Times that four pro-EU ministers may follow Transport Minister Jo Johnson who resigned last week expressing his discontent over Brexittalks. May is losing the battle to find sufficient support for a deal with the EU, which needs to be fully agreed in parliament.
However, there is a renewed concern over Italy whereby the Commission has given Rome until Tuesday this week to present a new budget and could start disciplinary steps against Rome later this month.
"Italy may be part of the EU but its budget dispute it treating the EURUSD like the lira of old. The EURUSD is down 8.2% against the dollar since Italian election on March 4th and 3.6% since the formation of the current League/5 Star government,"
Joseph Trevisani, Senior Analyst at FXStreet highlighted.
EUR/GBP levels
Analysts at Commerzbank explained that EUR/GBP is weighing on BUT has not registered a close below the 0.8697 May low. "The move lower has not been confirmed by the daily RSI either and we would allow for a small rebound ahead of further losses. Please note we have conflicting signals here and would remain cautious. Beyond this we look for the market to remain on the defensive following the reaction lower last week from cloud resistance at 0.8894/0.8937. Failure at 0.8697 on a closing basis would target the 0.8620 2018 low."
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