EUR/GBP bid on political sentiment, but watch for pull backs while below 0.8800

Currently, EUR/GBP is trading at 0.8697, up 0.40% on the day, having posted a daily high at 0.8704 and low at 0.8659.

Besides sterling's vulnerability to the triggering of Article 50 on 29th March, EUR/GBP is making tracks with polls that continue to discount a win by the populist movement in the French elections. 

"Barring a poll showing any candidate getting a majority, the key for medium-term investors is not the poll outcome of the first round, but the second round.  There Le Pen loses handily.  Of course, things can change, but this is the base case.  Perhaps it will be Japanese investors who return to the French bond market.  They had been substantial buyers (higher yielding bunds?) but in recent months were featured sellers," explained analysts at Brown Brothers Harriman.

EUR/GBP levels

Analysts at Commerzbank explained that the EUR/GBP's near term outlook is neutral: "The market has held below 0.8800 for 3 days last week and very near term is downside corrective. We suspect that the market has lost upside impetus and will slide back to the 55-day ma at 0.8594. Above 0.8800, there is scope to tackle the 0.8852 January high. We look for the downside currently to be limited by the 200-day ma at 0.8552. The market is now bid above the 0.8552 200 day ma. Failure here will re-target the 0.8401 February low. Short Term Trend (1-3 weeks): Neutral. Long-term trend (1-3 months): Neutral to negative."



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