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EUR/GBP drops to 5-week lows as pound soars on Brexit talks

  • Pound gained momentum amid Brexit talks. 
  • UK and Ireland near a border deal.
  • EUR/GBP eyes multi-month lows. 

The EUR/GBP pair broke below 0.8775 and dropped to 0.8739, hitting the lowest level since November 1. As of writing it trades near the lows, holding a bearish tone as the pound rises across the board on the back of new developments regarding Brexit talks. The euro is headed toward the lowest close since mid-June against the pound. 

Hopes of a deal before the EU summit 

Reuters reported that according to an Irish official, the United Kingdom and Ireland were close to an agreement on the border issue. Previously Bloomberg mentioned that the UK and the EU reached a deal on the future role of the European Court of Justice. In the case of an agreement with the Irish border, a deal regarding current talks between the UK and the EU could be achieved ahead of next week’s summit. 

Those media reports boosted the pound. GBP/USD rose above 1.3450 at the time that EUR/GBP hit levels under 0.8750. To other strong currency of the US  session is the US Dollar the printed fresh highs against majors (excluding the pound) while gold broke below $1250/oz. 

Technical levels 

The immediate support for EUR/GBP is the 0.8730 area (November lows), followed by 0.8700 and 0.8640 (June lows). On the upside, now 0.8775 is the immediate resistance and then 0.8795 and 0.8830. A consolidation on top of 0.8830 would ease short-term bearish pressure.