- EUR/GBP breaks beyond 0.89940 resistance and approaches 0.9000.
- The pound weakens on Brexit uncertainty and Scotland's independence referendum.
- Breach of 0.9000 would improve the euro's near-term bias.
The euro has accelerated its recovery from 0.8865 lows earlier this week, appreciating to levels right below 0.9000. The pair is on course to gain 0.7% on the week, regaining lost ground after having depreciated in three of the last four weeks.
Brexit and Scotland weigh on the pound
The cable is showing broadly vulnerable on a thin trading session due to the Thanksgiving weekend in the US. Brexit uncertainty and speculation of a new independence referendum in Scotland have dented confidence in the GBP.
Another week is gone without any significant progress in the UK-EU negotiation for a post-Brexit trade deal. With only five weeks more left before the end of the transition period, the chances of an unorderly exit from the Unions are increasing considerably as the positions in key issues like fishing continue far apart.
Beyond that, Scottish National Party leader, Nicola Sturgeon, announced on Friday that she wants to celebrate a second independence referendum “in the earlier part” of the next parliamentary term, which begins next year. This has contributed to weakening the sterling against its main rivals.
EUR/GBP approaching important resistance at 0.9000
From a technical perspective, the EUR/GBP has broken above the top of the last for day’s range and approaches an important resistance at 0.9000 (November 12 and 13 high). Above here, negative pressure might ease which could help to push the pair towards 0.9050/65 (November 5 and 6 highs) and 0.9105 (October 12, 13 highs).
On the downside, a bearish reversal might find support at 0.8940 (November 25high) and below here, 0.8860 (June, September and November lows) and 0.8800/10 (May 4, 11 highs).
Technical levels to watch
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