- EUR/GBP trapped between 100 and 200-D SMAs.
- EUR/GBP politics the driving force.
EUR/GBP is embarking on 0.8880 as sterling continues its northerly trajectory. Currently, EUR/GBP is trading at 0.8891, up 0.60% on the day, having posted a daily high at 0.8925 and low at 0.8841. In the absence of data, politics is leading the way and sentiment for a soft Brexit supports sterling.
Analysts at Rabobank noted that at the start of this month the BoE indicated that it was in no rush to follow up its 25 bps rate hike. "This clears the decks for politics to be the most significant influence on the pound in the remaining weeks of the year. Near-term, GBP is clearly vulnerable to political uncertainty and over the medium-term politics is likely to ensure that volatility is heightened," the analysts explained, however, warning that uncertainty is likely to weigh on UK investment and growth potential. "The implication is that GBP has the potential to slip further on a 12 mth view before snapping back around March 2019. We retain a 12 mth forecast of EUR/USD0.95," the analysts added.
Trapped between the 100 (0.8945) and 200-D SMAs (0.8770), a break for the 0.90 handle opens 0.9026/34 where the 61. 8% Fibonacci retracement at 0.9093 sits along with the mid-August high at 0.9145. 0.9306 is the 28th Aug and year 2017 high. To the downside, below 0.8884 (21 hourly SMA) and 0.8820 opens 0.8723 (the 55-week ma) that guards a run towards 0.8530 being the 78.6% retracement of the 2017 trend.
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