EUR/GBP advances to session highs around 0.8780

The cross is prolonging the weekly sideline theme below 0.8800.
UK Retail Sales next on tap on Friday.
MPs will discuss Brexit amendments later in the HOC.

Pablo Piovano FXStreet

The Sterling has reverted the initial optimism and is now helping EUR/GBP to move higher and test session tops in the 0.8780 region.

EUR/GBP looks to Brexit debate

The continuation of the rally in the greenback is weighing on any attempt of recovery in the British Pound and the rest of the risk-associated assets and is now lifting the European cross to the area of daily highs in the 0.8780/85 band.

Later in the day, MPs are set to debate and discuss further amendments in the House of Commons, while PM Theresa May is seen intensifying her efforts to get a deal through Parliament.

In the UK docket, inflation figures for the month of January disappointed expectations yesterday, as headline consumer prices rose 1.8% from a year earlier vs. 1.9% forecasted and December’s 2.1% gain. Moving forward, Retail Sales during the first month of the year are due tomorrow.

What to look for around GBP

The British Pound is expected to remain under increasing pressure as we get closer to the March 29 deadline and there is still not a hint of a solution to the EU-UK divorce, where the Irish backstop stays in centre stage and a ‘hard Brexit’ scenario is not totally ruled out. Extra weakness hitting the Sterling also comes from deteriorated fundamentals in the UK, the persistent downtrend in inflation as well as lower growth forecasts, as per the latest BoE event.

EUR/GBP key levels

The cross is now gaining 0.15% at 0.8778 facing the next hurdle at 0.8821 (high Feb.5) followed by 0.8860 (200-day SMA) and finally 0.8884 (55-day SMA). On the downside, a breakdown of 0.8752 (21-day SMA) would open the door to 0.8728 (low Feb.7) and then 0.8617 (2019 low Jan.25).

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Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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