EUR/GBP pops to fresh Brexit/economy-woe highs, bulls seeking out the 0.90s
|- EUR/GBP jumps to a fresh cycle high in the open of Asia.
- Bulls taking on risk as fundamentals deteriorate for the pound.
- Technical readings favour a run into the 0.90 handle, eventually.
EUR/GBP has been on the march this month and has just reached a fresh impulse high as the cross continues to extend the March downside correction from the 0.8680s. The UK economy is in tatters and traders know it. Brexit is also back to the fore and weighing significantly on the pound.
We have seen minimal progress in UK-EU trade negotiations so far and the weekend headlines, including those pertaining to the prospects of negative rates, are going to really weigh on the pound for the foreseeable trading week:
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UK’s Frost: Tells UK PM, Barnier 'losing the argument' in Brexit trade row – Telegraph
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BoE Examining Negative Rates, Haldane Tells Telegraph – BBG
The UK continues to refuse the extension of the transition period as we move forever closer towards the June deadline for the extension of the transition period. Markets might need to wait it out for EUR/GBP to cross above 0.90 at this juncture, however, for the euro isn't exactly the cleanest shirt in the laundry basket either. Meanwhile, markets are set on the upside targets and the technical picture offers some room to support for it, albeit a pullback may not be out of the question prior to the next potential advance:
UK data in focus
Meanwhile, we have the second fiddle to Brexit in play later this week with there being plenty of UK data on the cards. Markets will not be so interested in the month on month data but the year on year definitely qualifies as a contender for a catalyst outside of Brexit headlines. We will have to wait, however, until Friday for the year on year Retail Sales (Fri) but before then, April Consumer Price Index will be in focus (factoring a drop in the oil price). Tuesday's jobs data will not fully show the full extent of COVID-19's impact.
EUR/GBP levels
As per, Chart of The Week: EUR/GBP Price Analysis, bullish to 0.9060, although pullback to support first?, the bulls are seeking out the 0.90 handle with 0.9060 as a keen target.
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