EUR/GBP: Brexit optimists look to 200-week ma at 0.8404

UK Lawmakers failed again yesterday on backing any kind of a majority for any style of Brexit option which stripped the sterling bulls of ammunition once again. However, there is still a bias towards a customs union proposal, an option that was losing by just three votes. 

The most optimistic of observers clutch to straws of a cross-party compromise, a sentiment was underpinned following today's emergency 5 hours cabinet meeting, held in an attempt to forge a path through the current dead-lock. 

PM May offered a statement following the meeting which has told the nation that she is seeking out Corbyn's support before she heads to Brussels for a further extension, lifting sterling on the hopes of a soft Brexit - However, this leaves sterling exposed to bad news and the cross hangs in the balance. 

Meanwhile, Eurozone core inflation eased further to 0.8% m/m in March and just 0.2 percentage points away from the all-time low which leaves the ECB under pressure to respond to a renewed risk of disinflation amid slow pace of growth. 

"...Rates will stay negative for a much longer period than indicated by the ECB’s current forward guidance and would pave the way for further deposit rate cuts," analysts at Rabobank noted 

EUR/GBP levels

Analysts at Commerzbank noted that EUR/GBP has backed away from challenging the 55-day ma, currently at 0.8665:

"A close above here would allow for a test of the recent high at 0.8723 and 0.8835 (200-day ma). It continues to hold the 0.8471 recent low and we suspect might be trying to base near term. Currently, though we remain unable to rule out the risk of a slide to the 200-week ma at 0.8404."