EUR/GBP: Bears not done yet, peirce base of the channel at 0.8539 on Brexit headlines, sights on 200-W SMA at 0.8370

• PM May confirmed that should her deal be rejected by March 12, then the PM will put forward the choice to MPs of a no-deal Brexit vote on March 13 and should that be rejected, then a vote on extending Article 50 will be put forward on March 14.
• GBP/USD rallied throughout the session yesterday, ending +1.21% stronger, its best performance since last November. It continued to make gains overnight and met a high of 1.3336 in London, chopping sideways in North America. EUR/GBP has been as low as 0.8540 and the strongest since May 2017 - Analysts at Deutsche Bank target 0.84 in EUR/GBP. 
• Brexit is on focus at 2pm ET as MPs vote on amendments to PM May’s motion.

EUR/GBP is vulnerable to further downside, in fact, at the time of writing, cable is on the fly again and exceeding session highs as the DXY crumbles below the 96 handle again, sparked during Powell's second day of testifying, saying they will make a decision on the balance sheet relatively soon. However, the main focus for the pound stays with Brexit.

MPs will be voting later today on the PM May's neutral motion, starting at 2pm ET and taking 1-2 hrs. There will be 12 amendments that were proposed, but many of the threatening amendments to her motion have now been pulled which is giving May's popularity a boost, so tonight's votes should be relatively benign - We should hear what amendments will be voted on anytime soon (UK GMT lunchtime-ish).

However, the main reason the pound is so strong is that Theresa May announced and to Parliament after a Cabinet meeting and confirmed speculation that MPs will have the opportunity to hold two important votes should the next “meaningful vote” on her Withdrawal Agreement plan fail. MPs can vote on whether they support a no-deal exit, (pretty unlikely), and also whether they would support a (limited) extension to the Article 50 end date.

Brexit summary

Tim Riddell, Macro Strategist at Westpac, sums it all up nicely as follows:

• No-deal risks have been greatly reduced
• PM May has avoided further (and more prominent) resignations
• Delaying of Article 50’s end date is now increasingly likely, but only for a few months
• Labour is highly unlikely to achieve any turnover in Parliamentary initiatives on Brexit
• May’s maligned plan could now gain more support from hardliners and DUP if changes to the Backstop are deemed “sufficient”
• However, chances of May’s plan being defeated once more remain high
• Deadlock may persist and could still result in either a “People’s Vote” on May’s plan or Remain or a General Election – both of which would further delay Brexit/Article 50

Bank EUR/GBP targets

However, analysts at TD Securities are cautious over the pounds rise: "PM May's concession that an A50 extension will be considered if her deal does not pass next month just adds more fuel to the sterling fire. While momentum may extend the move - especially vs. EUR - we are reluctant to chase it at this time." 
Analysts at Deutsche Bank are more bearish: "We should add that our FX strategists yesterday reinstated their Sterling long trade in light of recent developments and target 0.84 in EUR/GBP."
"While our central projection is for EUR/GBP to be positioned in the 0.86-85 area on a 3 to 6-month view, on a hard Brexit will see the potential for a move towards EUR/GBP1.00," - analysts at Rabobank argued. 

EUR/GBP levels 

EUR/GBP is on the defensive but has given way to the base of the channel at 0.8539, piercing there to a low of 0.8529 opening prospects of a run to the 200-week ma at 0.8370. "Rallies are likely to find initial resistance at 0.8620 and 0.8730 (22nd February high) ahead of 0.8845/59 (55 and 200-day ma)," analysts at Commerzbank explained.